TORONTO (Reuters) - Toronto's main stock index closed higher on Wednesday, hitting its highest point since September 2008 earlier in the day, as commodity prices rose after the U.S. Federal Reserve's renewed pledge to keep interest rates low for an extended period.
Energy producers led the gains as oil rose toward $83 a barrel, supported by a weaker U.S. dollar and higher demand in the United States, while OPEC decided to leave output targets unchanged.
"As long as the Fed is keeping interest rates low, it's making everyone quite comfortable in terms of having cheap money out there," said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management in Vancouver.
Solid base metal prices boosted the mining sub-sector, with Teck Resources TCKb.TO ahead 1.2 percent at C$41.97 and Ivanhoe Mines IVN.TO adding almost 2 percent at C$16.68.
Offsetting those gains, however, gold miners were down 0.4 percent on softer bullion prices, helping drag down the broader materials sector 0.28 percent.
Financials also retreated on uncertainty over proposed, stricter banking regulation in the United States. Toronto-Dominion Bank (TD.TO) fell 0.6 percent to C$74.54, while Royal Bank of Canada <RY.TO, the country's biggest bank, was unchanged at C$59.46. Both banks have large U.S. operations.
"I think what you're seeing is not only potentially the Volcker rule coming in but potentially tempering a bit of risk-taking for a lot of banks and I think that's probably being taken as negative," added Zohny.
The proposed "Volcker rule", first introduced by U.S. President Barack Obama early this year as a way to rein in overly speculative investments, would curb proprietary trading at U.S. banks and force them out of the hedge fund business.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 11.26 points, or 0.09 percent, at 12,100.66. Earlier, it touched 12,122.47, its highest level in 17 weeks, but for the most part trading was sideways.
"There's not really a lot going on, not just because of the weather and St. Patty's Day -- everybody's outside -- but it is March break and things are quite quiet," said John Kinsey, a portfolio manager at Caldwell Securities.
"We have people away, and this is not unusual."
In a Reuters poll published on Wednesday, respondents said the TSX would likely remain flat into the middle of the year then push higher toward the end of 2010, supported by its heavy weighting in resource issues as the economy slowly heals.
Reporting by Claire Sibonney; editing by Rob Wilson