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TORONTO (Reuters) - Toronto's main stock index advanced on Monday as energy and materials producers rose on the back of stronger commodity prices.
Raw materials prices got support from hopes for strong Chinese demand, and that also lifted global equities. Oil rallied above $78 a barrel, snapping a five-day losing streak.
Among the Toronto index's top gainers were Suncor Energy, up 0.79 percent at C$37, while fertilizer producer Potash Corp gained 1.1 percent to C$119.30.
The S&P/TSX composite index closed up 65.17 points, or 0.56 percent, at 11,750.54. Volume was a fraction of its normal levels, with U.S. markets closed for the Martin Luther King Jr. holiday.
"With light volume and not a whole lot of conviction, there is no one shooting the lights out," said Peter Chandler, senior vice-president at Canaccord Wealth Management.
Financial shares were also on the rise, after coming under pressure for the first two weeks of the year. Toronto-Dominion Bank led all heavyweight advancers, climbing 1.2 percent to C$64.10, while Manulife Financial was up 1.1 percent at C$20.54.
Six of the index's 10 main groups were higher, with the three biggest sectors -- materials, financials and energy -- each up more than 0.6 percent.
The index's direction this week will likely come from more company earnings announcements from the United States. But investors will also comb through the Bank of Canada's interest rate announcement on Tuesday and Monetary Policy Report on Thursday for hints on when bank intends to raise rates for the first time since the recession hit.
Market players will also monitor a raft of Chinese data this week for clues on whether Chinese domestic consumption is helping to offset persistent weakness in U.S. demand.
Concerns remain that China's central bank could act again to cool inflation pressures in the economy. Last week, Toronto's resource-laden main index was shaken by news that China's central bank was tightening monetary policy at a faster than expected pace.
"If we see the Chinese government, for example, do some of the things they did on the banking side to try to sort of temper the enthusiasm over there, and try to temper inflation, then that's certainly going to impact us as well," said Brian Pow, vice president at Acumen Capital Partners in Calgary.
In individual company news, units of Enterra Energy Trust surged after it said it plans to convert to a corporation from its trust structure to address upcoming taxation changes in Canada. Enterra jumped 25.9 percent to C$2.72.
The move is seen consistent with an approaching government deadline next year that will see Canada's income trusts lose their favored tax status.
Additional reporting by Claire Sibonney; editing by Peter Galloway