TSX rises to nearly 16-month high, led by resource stocks

By Fergal Smith TORONTO (Reuters) - Canada's main stock index rose to a nearly 16-month high on Wednesday, led by energy and mining companies as oil surged and gold climbed, while financial stocks also gained ground. The index has rebounded nearly 29 percent since hitting a three-year low in January, but had been unable to make new highs since August. "As long as you have the economy continuing to do ok and you have a bid on the energy side and a stabilization of oil prices, I think there is room for the market to head higher into year end," said Bryden Teich, portfolio manager at Avenue Investment Management. The energy group rose more than 2 percent as U.S. crude oil climbed to a 15-month high. Enbridge Inc rose 1.5 percent to C$59.02. Canada's largest pipeline company is laying off 5 percent of its work force after an organizational review, a spokeswoman said. Suncor Energy Inc rose 1.7 percent to C$38.61 and Encana Corp added 3.8 percent to C$15.16, while U.S. crude prices settled up $1.31 at $51.60 a barrel as the government reported a surprisingly large drop in domestic inventories for the sixth week out of seven. [O/R] Higher oil prices supports Canada's economy, which gives a lift to other sectors on the TSX, including financials, Teich said. Financials rose 0.3 percent, helped also by "positive earnings momentum from U.S. financials," said Teich. The materials group, which includes precious and base metals miners and fertilizer companies, added 1.9 percent. Goldcorp Inc rose 3.4 percent to C$20.15, while Barrick Gold Corp was up nearly 6 percent at C$22.75. Spot gold firmed 0.5 percent amid uncertainty around the timing of a U.S. interest rate increase. [GOL/] At 3:14 p.m. EDT (1914 GMT), the Toronto Stock Exchange's S&P/TSX composite index rose 115.15 points, or 0.78 percent, to 14,867.40. Seven of the index's 10 main groups were higher. Gains for the index came as the Bank of Canada cut its growth forecast and said it actively discussed adding more monetary stimulus to speed up the nation's economic recovery. Canadian Pacific Railway Ltd declined 1.5 percent to C$198.21 after the country's No.2 railroad operator reported a 9.1 percent drop in quarterly revenue, due mainly to a delayed grain harvest and lower crude oil volumes. (Additional reporting by Alastair Sharp; Editing by Bill Trott and Diane Craft)