May 20, 2009 / 8:56 PM / in 8 years

CANADA STOCKS-TSX drives higher but closes off 7-month high

* TSX index rises 1.3 pct after touching 7-month high

* Energy, materials lead rally (Adds details, quote, updated numbers)

By Cameron French

TORONTO, May 20 (Reuters) - Toronto’s main stock index climbed more than 1 percent on Wednesday, boosted by rising oil and gold prices, but it pared stronger early gains as investors took profits after a sharp two-day rise.

The index rose by as much as 2.6 percent shortly after the open, touching a seven-month high of 10,365.39, as oil charged to a six-month high above $62 a barrel, while gold climbed to an eight-week peak above $940 an ounce.

Energy issues rose 2.17 percent, while the mining-heavy materials sector climbed 3.03 percent, largely on the back of gold stocks.

Among materials stocks, Yamana Gold (YRI.TO) surged 7 percent to C$11.42, while Goldcorp (G.TO) climbed 6.3 percent to C$42.14. Stronger copper prices also boosted the sector.

In the energy subgroup, Suncor Energy (SU.TO) rose 3.4 percent to C$36.26, while UTS Energy UTS.TO gained 4 percent to C$1.57.

All told, the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE rose 131.49 points, or 1.3 percent, to finish at 10,232.44.

Bruce Latimer, a trader at Dundee Securities, said the pullback from the big early gain was not unexpected given the 3.5 percent rise in the previous session.

“We’ve had a heck of a run over the last eight weeks, and to have the the odd day of giveback is not out of the ordinary, especially when we had a big day on Tuesday, which I think caught a lot of people off guard,” he said.

$1=$1.14 Canadian Reporting by Cameron French; editing by Peter Galloway

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