June 2, 2009 / 2:45 PM / 10 years ago

CANADA STOCKS-TSX firms as bank shares show strength

* TSX up 8.05 points after falling at open

* Bank shares lead index’s quick turnaround

* Energy shares limit gain with 1.4 pct drop (Adds details and comments)

By Frank Pingue

TORONTO, June 2 (Reuters) - Toronto’s main stock index was slightly higher on Tuesday morning after a soft start as bank shares extended a recent rally and more than offset the drag lower oil prices were having on energy shares.

A 1 percent jump in the financials group, which makes up about 33 percent of the index, was credited with the turnaround in the TSX, which fell 89 points early in the session.

Investors continued to flock to the financials index after most Canadian banks reported quarterly results last week that were better than expected.

Shares of Toronto-Dominion Bank (TD.TO) rose 1 percent to C$57.26, while Royal Bank of Canada (RY.TO) shares were up 0.6 percent at C$44.92.

But the overall index’s gain was limited by a 1.4 percent drop in the energy sector, which was down in tandem with a skid in oil prices.

Shares of Suncor Energy (SU.TO) were off 2.9 percent at C$38.79, while EnCana Corp (ECA.TO) shares dropped 0.8 percent to C$62.33.

“They had such a huge move it’s just a little bit of a pullback, nothing much,” said Sal Masionis, stockbroker at Brant Securities. “And there’s question marks about General Motors. People are questioning the whole government involvement in the market.”

The governments of Canada and Ontario said on Monday they would provide a C$10.5 billion rescue package to GM, giving them a combined 11.7 percent of the common shares of the new company. [ID:nN01160587]

At 10:35 a.m. (1435 GMT), the S&P/TSX composite index .GSPTSE was up 8.05 points at 10,612.11. Six of the TSX’s 10 sectors were higher.

$1=$1.08 Canadian Editing by Peter Galloway

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