* TSX rises 100.45 points, or 0.87 percent, at 11,686.32
* Nine of 10 sectors higher; banks drive gains (Adds further analyst comment, detail)
By Trish Nixon
TORONTO, Sept 29 (Reuters) - Toronto's main stock market index rose on Thursday as stronger-than-expected U.S. economic data and German approval of a beefed-up euro-zone crisis fund helped ease two of the worst fears hanging over the market.
But intense intra-day swings highlighted investor anxiety. The index retreated from an earlier jump of 1.5 percent and at times traded negative as traders reflected on the big challenges still ahead for the euro zone as policymakers work to prevent a crisis that began in Greece from spreading far beyond Europe. [ID:nL5E7KT2WC]
"We're in a market right now that's looking for something to latch on to give it direction," said Julie Brough, vice president at Morgan Meighen & Associates.
"At the end of the day, there aren't really resolutions to the problem. There's inklings of hope, but we've seen so many of these things in Europe where you make some progress, but then you don't get to the point where anything's really implemented."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 100.45 points, or 0.87 percent, at 11,686.32. Nine of 10 sectors were higher.
The financial sector closed 1.9 percent higher, driving the index's gains. Bank of Nova Scotia (BNS.TO) was the top advancer as it jumped 2.4 percent to C$53.70. Toronto-Dominion Bank (TD.TO) gained 2 percent to C$75, and Royal Bank of Canada (RY.TO) added 1.9 percent to C$48.41.
Energy issues rose 1 percent, helped by rising oil prices. Suncor Energy (SU.TO) rose 2.4 percent to C$27.71, and Cenovus Energy (CVE.TO) jumped 3.4 percent to C$33.22.
Base-metal miners weighed. The TSX's mining sub-group fell 1.5 percent as copper prices added to their monthly rout, down more than 1 percent on the day and more than 20 percent so far in September. First Quantum Minerals (FM.TO) was a top decliner, down 5 percent at C$14.40. [MET/L]
Market volatility is likely to remain high as traders react to European headlines and attempt to gauge the commitment of governments and institutions as they work to prevent a Greek default.
A rebalancing of portfolio holdings as the third quarter draws to a close could also keep markets volatile.
"It'll be interesting tomorrow to see what does happen," said John Kinsey, a portfolio manager at Caldwell Securities Ltd.
"For a lot of the month there was a lot of short covering and margin calls. That kind of ended the last few days for New York, but Toronto, because of the more commodity-oriented weighting that it has, hasn't performed as well."
Shares of Research in Motion RIM.TO dropped 3.1 percent to C$21.97. The BlackBerry maker brushed off suggestions on Thursday that it would discontinue production of its PlayBook computer tablet as "pure fiction" after an analyst said the company may be considering an exit from the market.
Petrobakken PBN.TO shares plunged by more than a fifth on fears the company may have to suspend its lucrative dividend. [ID:nS1E78S1QO] (Editing by Jeffrey Hodgson)