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(Adds analyst quotes and details on index's performance, updates prices)
* TSX closes up 86.36 points, or 0.59 percent, at 14,797.18
* Index touches its highest in nearly 3 weeks at 14,841.23
* Nine of the TSX's 10 main groups end higher
By Fergal Smith
TORONTO, Sept 22 (Reuters) - Shares of energy and financial companies led a broad rally on Canada's main stock index on Thursday as oil prices rose and investors digested the U.S. Federal Reserve's more cautious approach to future rate hikes.
The Toronto Stock Exchange's S&P/TSX composite index has rallied 1.9 percent over the past two days, although stopping short of an August peak at 14,855.69 that, if breached, would push it to its highest since June 2015.
"It's still a follow through from yesterday's price action for the broader markets, not just the TSX.", said Sid Mokhtari, director, institutional equity research, CIBC World Markets.
World stock indexes advanced and the Nasdaq hit a record high while bonds rallied, a day after the Fed scaled back the number of rate increases expected in 2017 and 2018.
The Toronto Stock Exchange's S&P/TSX composite index closed up 86.36 points, or 0.59 percent, at 14,797.18. It touched its highest since Sept 2. at 14,841.23.
Nine of the index's 10 main groups ended higher.
Some of the country's biggest energy producers were among the most influential gainers, with Canadian Natural Resources rising nearly 2 percent to C$40.11 and Suncor Energy Inc up 1.6 percent to C$34.96.
The overall energy group climbed 1.4 percent as oil rallied.
U.S. crude oil futures settled up 98 cents at $46.32 a barrel, boosted for a second day by U.S. government data that showed a surprisingly large drop in U.S. crude inventories.
The financials group gained 0.7 percent, led by a 3.9 percent jump in the shares of Brookfield Asset Management Inc to C$45.89. RBC raised the stock to a "top pick" designation, a trader said.
Manulife Financial Corp advanced 0.9 percent to C$18.68.
The utilities sector rose 0.7 percent, while telecommunications gained 0.6 percent.
The outlook for those higher yielding sectors has improved after recent selling pressure reduced an overbought condition, Mokhtari said.
The materials group, which includes precious and base metals miners and fertilizer companies, was the lone sector to decline, falling 0.4 percent.
Teck Resources Ltd tumbled 7.9 percent to C$22.27, while Barrick Gold Corp was down 1.4 percent at C$24.16.
Spot gold was little changed at $1,336.65 an ounce after having made an earlier two-week high.
Canada and China settled a trade dispute and said they would start exploratory talks on a free trade pact. (Additional reporting by Alastair Sharp; Editing by Bernadette Baum and Diane Craft)