TSX grinds higher as banks lift, energy retreats

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index rose on Thursday as financial and industrial shares climbed, while lower oil prices weighed on energy stocks.

Royal Bank of Canada (Toronto:RY.TO - News), the country's biggest bank by market capitalization, added 0.8 percent to C$100.82, while the overall financials group gained 0.5 percent. The group has soared more than 9 percent since early September.

"It is really incredible how dramatically they have snapped up in the last month or so," said Bryden Teich, portfolio manager at Avenue Investment Management. "It's saying there is confidence that the banks are going to report strong earnings."

Canadian banks will begin reporting fourth quarter earnings next month.

Investors will also key off a Bank of Canada interest rate decision next week. After rate hikes in July and September, the first in nearly seven years, the market is expecting the central bank to pause.

"If they do hold ... it is a green light for the market, because it means the Bank of Canada isn't going to be overly hawkish," Teich said.

Higher interest rates tends to raise margins for banks but it could also add to a slowdown in the previously red-hot housing market which investors worry could slow loan growth.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed up 35.84 points, or 0.23 percent, at 15,818.00.

Five of the index's 10 main groups ended higher.

It included a 0.6 percent rise in industrial shares, led by Canadian National Railway Co (Toronto:CNR.TO - News), which rose 1.6 percent to C$102.64.

The materials group, which includes precious and base metals miners and fertilizer companies, gained 0.4 percent.

The price of gold rebounded from one-week lows as a rally in equities and the U.S. dollar lost some momentum.

But copper prices fell for a third straight day as investors took profits after prices rallied above $7,000 a tonne for the first time since September 2014 earlier this week, and after data showed economic growth in China was in line was expectations.

Rogers Communications Inc (RCIb.TO) was among the biggest drags on the index, sliding 1.2 percent to C$66.05 as it signed up fewer internet customers than expected. The decline also comes after shares have rallied more than 6 percent over the last three weeks.

The energy group retreated 0.5 percent as the price of oil fell, with Encana Corp (Toronto:ECA.TO - News) down 2.0 percent to C$14.40. U.S. crude prices settled 1.4 percent lower at $51.29 a barrel.

(Additional reporting by Solarina Ho; Editing by Meredith Mazzilli)