TSX rises amid broad-based gains; ends week 1.2 percent higher

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index rose on Friday as financials and energy led broad-based gains, helped by a global rally in stocks as the negative impact of Federal Reserve rate hike speculation faded.

The index rose 1.2 percent for the week, while it has rebounded more than 20 percent from an almost 3-1/2-year low in January. Still it has yet to climb back above the 14,000 threshold.

A relief rally globally gave Canada's market a lift after stocks were pressured by hawkish Fed minutes earlier this week, said Matt Skipp, president of SW8 Asset Management.

Wall Street also closed higher, while major indices in Europe and Asia climbed. [.N]

Shares of Manulife Financial Corp (Toronto:MFC.TO - News) rose 2.1 percent to C$18.79, while the country's major banks also advanced. The overall financials group ended 0.6 percent higher.

Canada's biggest banks are expected to set aside more funds to cover bad loans to the oil and gas sector, eating into their profits when they announce second quarter results next week, analysts say.

Energy stocks rose 0.5 percent even though U.S. crude prices settled down 41 cents at $47.75 a barrel.

The market perceives that wildfire-related difficulties faced by oil sands producers in Alberta are transitory, said Skipp.

The wildfire has moved from oil-rich Alberta into Saskatchewan, but that province's fertile farms and lucrative mines are tucked far away from the blaze's path.

Pipeline operator Enbridge Inc (Toronto:ENB.TO - News) rose 1.5 percent to C$52.86, while Canadian Natural Resources Ltd (Toronto:CNQ.TO - News) was up 1.3 percent at C$37.92.

Industrial stocks rose 0.8 percent, including gains for railway stocks, while the materials group, which includes precious and base metals miners and fertilizer companies, gained 0.4 percent.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed up 102.26 points, or 0.74 percent, at 13,919.58. All of the index's 10 main groups ended higher.

However, Skipp is skeptical that the rally can be sustained.

"A big part of the rise in Canadian equities this year is a result of a dovish Fed and a weaker U.S. dollar," he said. "I'm not convinced that the U.S. dollar is in a downtrend ... and I'm not convinced that the global economy is actually strong enough to support our very resource-focused stock market."

Domestic economic data was mixed. Weaker-than-expected retail sales data underscored expectations that Canada's economy slowed heading into the second quarter, but core inflation rose to 2.2 percent.

(Reporting by Fergal Smith; Editing by W Simon and James Dalgleish)