May 15, 2015 / 11:45 AM / in 2 years

Resource stocks help TSX gain; financials weigh

A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch

TORONTO (Reuters) - Canada’s main stock index gained on Friday as a broad rally led by oil and gas, mining, and industrial stocks offset weakness among large-cap banks and insurers.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE added 80 points, or 0.53 percent, to 15,108.12. It ended the week off 0.4 percent.

Energy stocks gained despite mixed price action in crude markets that had traders and investors debating whether a recent rally could continue amid stubbornly high supplies. [O/R]

Among the biggest gainers were pipeline companies Enbridge Inc (ENB.TO), up 2.3 percent at C$61.84, and TransCanada Corp (TRP.TO), which gained 1.8 percent to C$54.59.

Smaller energy issue Canadian Energy Services & Technology Corp CEU.TO surged almost 19 percent to C$6.66 after it declared a dividend and its earnings beat expectations.

Overall, energy stocks, which make up 20 percent of the index, rose 0.7 percent. Industrials added 1 percent, with Canadian National Railway Co (CNR.TO) up 1.9 percent at C$74.96.

The materials group, home to mining companies, rose 0.5 percent, with Potash Corp (POT.TO) up 2.3 percent at C$39.63.

Valuations have broadly risen recently in anticipation of stronger economic growth and a clearer picture for commodities in the back half of the year.

“Valuations have been rising, but unless people are forecasting a precipitous drop in earnings it’s not a cause for worry yet,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. “The market could grow into those higher valuations.”

Of the index’s 10 main groups, only financials retreated, shedding 0.2 percent. There were 2.5 times as many advancers as decliners.

Manulife Financial Corp (MFC.TO) lost 0.5 percent to C$22.62, while Toronto-Dominion Bank (TD.TO) fell 0.2 percent to C$55.36 and Bank of Nova Scotia (BNS.TO) slipped 0.3 percent to C$65.

“We think the headwinds for Canadian banks are such that they will underperform,” said Norman Levine, managing director at Portfolio Management Corporation. He said life insurance companies should benefit as bond yields rise, a trend that has been underway since early April.

The banking earnings season kicks off later this month.

Additional reporting by Solarina Ho; Editing by Meredith Mazzilli and Alan Crosby

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