(Corrects earlier report to fix first bullet to read materials group rose 3 percent on commodity prices, not TSX)
* Materials rise 3 pct on commodity prices
* Energy sector up 0.8 percent as oil climbs
* Caution over U.S. bank plan keeps gains in check (Adds details, quote)
TORONTO, Feb 10 (Reuters) - Toronto’s main stock index was higher on Tuesday morning as rising commodity prices boosted resource issues, but caution over a White House plan to deal with ailing U.S. banks held back the big financial services sector.
The resource-laden materials group led the benchmark index higher, rising 3 percent, helped by climbing gold prices.
The oil and gas sector rose 0.8 percent as oil CLc1 rose nearly $2 to above $41 a barrel on hope that approval of the U.S. stimulus package will aid the economy and quell demand concerns. [ID:nSYD426207]
Heavily weighted stocks on the upside included miners Barrick Gold (ABX.TO), up 2.8 percent at C$47.10, and Goldcorp (G.TO), up 3.3 percent at C$37.26. Oil company Suncor Energy (SU.TO) rose 2.1 percent to C$26.60.
Despite the rise, the market was cautious ahead of details to be released later in the day on a U.S. plan to deal with the ailing banking sector, said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
“They are really waiting to get a strong sense that there is a credible plan in Washington to address the very serious concerns we have,” said Taylor. “They are in show-me mode.”
U.S. Treasury Secretary Timothy Geithner was due to unveil at 11 a.m. (1600 GMT) a plan that will include measures for relieving banks of money-losing assets. [ID:nLA744901]. Also on Tuesday the big U.S. stimulus bill is expected to be passed by the Senate.
At 9:56 a.m. (1456 GMT), the S&P/TSX composite index .GSPTSE was up 42.69 points, or 0.47 percent, at 9,089.97, with three of its 10 groups higher.
Financials fell 0.4 percent, with Sun Life Financial (SLF.TO) down 2.3 percent at C$24.72.
Also on Tuesday, Canadian legislators were pressing Bank of Canada Governor Mark Carney to justify his optimistic forecast for the Canadian economy.
Carney said the Bank of Canada has considerable flexibility to deal with the economy, including room to cut interest rates and expand liquidity operations. [ID:nOTW000243]
Carney’s testimony was expected to have only a negligible impact on stocks, Taylor said.
Among individual stocks, Canadian auto parts giant Magna International Inc MGa.TO agreed to acquire the European operations of bankrupt U.S.-based rival Cadence Innovation LLC, Magna said on Tuesday. [ID:nN10261244] Magna fell 0.7 percent to C$37.71.
$1=$1.22 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway