* TSX finishes up 2.47 percent at 10,392.37
* Energy shares up 3.56 pct, oil settles above $65/barrel
* Financial shares rise 2.74 percent on bank results (Adds details, quote)
By Jennifer Kwan
TORONTO, May 28 (Reuters) - Toronto's main stock market index rallied on Thursday as energy shares climbed in tandem with oil prices and financial shares gained as results from some of Canada's big banks topped market expectations.
Four banks reported results on Thursday that were stronger than expected, even as they set aside more money to cover bad loans. [ID:nN28311974]
The bank earnings helped to fuel optimism about an economic recovery, said Paul Harris, portfolio manager at Avenue Investment Management.
"People are feeling that the worst may be over or things are getting better, and at least there's a stabilization in the financial system," he said.
However, Canadian Imperial Bank of Commerce (CM.TO) was a top net loser, falling 4.5 percent to C$54.47, as its results were hurt by a raft of writedowns and investors were disappointed by the performance of its key retail operations.
The S&P/TSX composite index .GSPTSE closed 250.21 points, or 2.47 percent, higher at 10,392.37, with seven of its 10 main groups rising. On Wednesday the index fell 143.74 points, or 1.4 percent.
"The big dips that we've seen occasionally these days seem to be met with a lot of buying in the next day or two," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
Such buying into selloffs could indicate a change in sentiment and that investors don't want to be left behind, Picardo said .
The price of oil CLc1 rallied to a six-month high after OPEC decided to keep output unchanged and government data showed a steep drop in U.S. crude inventories. Oil settled above $65 a barrel. [ID:nSYD113600]
Oil company Canadian Natural Resources (CNQ.TO) rose 4.5 percent to C$64.52, while Petro-Canada PCA.TO climbed 4.8 percent to C$48.49.
The index's materials group rose 2.8 percent on firmer metals prices, with Barrick Gold (ABX.TO) up 3.2 percent at C$41.47.
Analysts said U.S. government data also helped market sentiment. Among the data: new home sales advanced in April, initial claims for U.S. jobless aid fell last week, and new orders for durable goods rose in April. [ID:nN28317740]
$1=$1.11 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway