* TSX up 2.16 percent at 10,658.14
* Materials gain 2.8 percent on firm gold prices
* Financials up 2.3 percent on economic outlook (Adds details, quote)
By Nina Lex
TORONTO, July 23 (Reuters) - Toronto’s main stock index was 2 percent higher early on Thursday afternoon, after the Bank of Canada said the country will pull out of its worst recession since the early 1990s during this quarter.
The central bank also said the world economy has likely averted a worst-case scenario and is bottoming out. [ID:nN23196742]
“They seem to think the worst is behind us and perhaps better times are ahead. The market usually anticipates the economy four to five months ahead,” said Bruce Latimer, a trader at Dundee Securities.
The financial sector, which accounts for about a third of the TSX index, rose 2.3 percent, boosted by this morning’s Bank of Canada announcement and by better than expected corporate earnings in the United States.
“We’ve seen about 72 percent of companies beat expectations thus far, which is a good sign,” said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
Manulife Financial (MFC.TO) was the index’s biggest gainer, up 5.1 percent at C$23.87.
At 12:18 p.m. (1618 GMT), the S&P/TSX composite index .GSPTSE was up 225.76 points, or 2.16 percent, at 10,658.14, its highest level in six weeks. Nine of its 10 main groups were higher.
The index’s mining-laden materials sector led the gains, up 2.8 percent, as gold held near six-week highs.
$1=$1.09 Canadian Reporting by Nina Lex; editing by Rob Wilson