TSX scores a 9-month high, led by energy and financials

TORONTO (Reuters) - Canada’s main stock index scored a nine-month high on Wednesday, led by energy and financial stocks as oil rose and investors grew more comfortable with the prospect of an interest rate hike as early as next month by the U.S. Federal Reserve.

A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch

The index has rallied 22 percent from an almost 3-1/2-year low in January of 11,531.22, helped by a rebound in commodity prices and stabilization in financial markets.

The market is in the process of getting comfortable with a June rate hike from the Fed, said Paul Gardner, partner & portfolio manager at Avenue Investment Management, who expects financials to benefit the most if the Fed does hike.

Higher oil prices have given financials an additional tailwind because of bank lending to oil companies, Gardner added.

Some of the most influential movers on the index included Royal Bank of Canada RY.TO, which rose 0.9 percent to C$79.25 and Canadian Natural Resources Ltd CNQ.TO, which advanced 2.1 percent to C$38.91.

The overall financials group rose 0.8 percent, while energy rallied 2.1 percent.

Oil approached $50 a barrel after the U.S. government reported a larger-than-expected drop in crude inventories. U.S. crude CLc1 prices were up 2.2 percent to $49.69 a barrel. [O/R]

Shares of Bank of Montreal BMO.TO rose 1.3 percent to C$84.27. The bank will shed around 4 percent of its 46,000 workforce as part of a drive to cut costs, staff were told in a memo after the lender reported a slightly lower-than-expected quarterly profit and set aside more funds to cover losses on bad loans.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 100.89 points, or 0.72 percent, at 14,053.74. It touched its highest since August 19 at 14,093.29.

Six of the index’s 10 main groups ended higher.

The materials group, which includes precious and base metals miners and fertilizer companies, added 1.8 percent.

Shares of Potash Corporation of Saskatchewan Inc <POT .TO> rose 2.3 percent to C$21.88, while Barrick Gold Corp ABX.TO advanced 1.2 percent to C$22.50.

Gold fell to a seven-week low on Fed rate hike speculation, but some losses were pared. Spot gold XAU= was down 0.2 percent at $1,224.02 an ounce.

Investors also digested a move by the Bank of Canada to hold interest rates steady. The central bank said the economy would shrink in the second quarter as a result of damage from the massive Alberta wildfires before rebounding later in the year.

Reporting by John Tilak; Editing by Nick Zieminski and Chris Reese