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(Adds portfolio manager comment, details)
By Alastair Sharp
TORONTO, Dec 18 (Reuters) - Canada's main stock index rose on Thursday, buoyed by a rally in resource stocks as a rebound in oil prices and an upbeat assessment of the U.S. economy by the Federal Reserve pushed investors back toward riskier assets.
Trading was volatile, however, with the index at one point turning negative after rising as much as 1.6 percent, with industrial and telecom stocks exerting downward pressure.
The Toronto Stock Exchange's S&P/TSX composite index was last up 54.66 points, or 0.38 percent, at 14,268.54.
If the rise is sustained, it would be the third straight day of gains for the index, which has suffered in recent weeks as a diving oil price has hurt Canadian-listed oil companies.
"Energy, regardless of what you think of the longer-term fundamentals based on supply and demand, was technically oversold," said Michael Simpson, senior portfolio manager at Sentry Select Capital. "How hard and how long the bounce is, that's another question."
Among oil and gas shares, Canadian Oil Sands Ltd jumped 11.4 percent to C$10.82, Cenovus Energy Inc gained 4.9 percent to C$22.94, and MEG Energy Corp rose 10.2 percent to C$18.24.
That trio is among producers that have scaled back 2015 spending plans or reduced dividends in response to tumbling oil prices.
"This is giving people reassurance that they are paying more attention to the balance sheet," Simpson said.
Shares in convenience store operator Alimentation Couche-Tard Inc surged 7 percent to C$45.60 after it said it would buy smaller U.S. rival Pantry Inc for about $861 million to boost its presence in the southeastern and Gulf Coast regions of the United States.
Telecom stocks were notably absent from the rally, with investors cautious on the sector ahead of a federal government wireless-industry policy announcement later in the day.
Telus Corp slipped 0.9 percent to C$42.25 and Rogers Communications Inc was off 1 percent at C$44.44.
Additional reporting by Solarina Ho; Editing by Chizu Nomiyama; and Peter Galloway