* Weak commodity prices keep lid on TSX gains
* Eight of index’s 10 main groups rise
* Federal budget due after markets close
TORONTO, Jan 27 (Reuters) - Toronto’s main stock index rose on Tuesday in a game of tug-of-war between the heavily weighted resource groups and the rest of the market.
The resource sectors, which account for about 40 percent of the index’s weighting, were under pressure from underlying commodity prices as the price of oil fell towards $43 a barrel ahead of U.S. inventory data and gold held below $900 an ounce as investors took profits after the last session’s gains.
The energy group fell 1 percent and materials dropped 0.72 percent.
“Commodities are weaker on continued concern that we’re no where near the bottom of the economic trough, and we’re a commodity-biased equity market. We trade with commodities,” said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
But financials, which make up a third of the index’s weighting, were firmer and led advances in the index’s seven other groups, which kept the TSX afloat.
Among the key decliners on Tuesday were Canadian Natural Resources CNQ.TO, down 2.2 percent at C$44.29, and EnCana ECA.TO, which slid 0.9 percent to C$54.60.
Financials dominated the gainers. Royal Bank of Canada RY.TO was up 2.7 percent at C$30.30, while Manulife MFC.TO gained 2.3 percent to C$20.64.
At 10:45 a.m. (1545 GMT), the S&P/TSX composite index .GSPTSE was ahead 10.47 points, or 0.12 percent, at 8,666.98. Eight of the index’s 10 main groups were higher.
Investors may have been taking a cautious stance ahead of the federal budget, which will be presented after markets close. The minority Conservative government is set to present plans to deal with the global economic crisis, and is expected to earmark money for infrastructure spending and aid to struggling industries such as lumber. [ID:nN23482302]
Investors will be looking for a “credible plan to get us out of this economic malaise that we’re in,” said Taylor.
“The market will be looking at where the dollars are going to be spent and obviously infrastructure is heavily implicated.”
$1=$1.23 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson