TSX posts biggest gain since June in broad-based rally

By Fergal Smith

(Reuters) -Canada's main stock index rose on Thursday to its highest level in six weeks, with resource shares contributing to a broad-based rally as commodity prices climbed and investors continued to bet on a pause in U.S. interest rate hikes.

The Toronto Stock Exchange's S&P/TSX composite index ended up 288.9 points, or 1.4%, at 20,567.84, its fourth straight day of gains and its biggest advance since June 2. It was the highest closing level for the TSX since July 31.

Data showed that U.S. retail sales in August rose more than expected on higher fuel prices but bets on the U.S. Federal Reserve pausing its interest rate hikes this month were unaffected.

The energy sector rose 1% as U.S. crude futures moved above $90 a barrel for the first time since November last year.

"Oil is so bullish that even a strong U.S. dollar can't derail the rally," Edward Moya, senior market analyst at OANDA, said in a note. "The risks of a significant supply shortfall should have many traders eyeing the $100 level over the next couple of months."

The materials group, which includes precious and base metals miners and fertilizer companies, added 1.7% as gold and copper prices rose after China took measures to support economic recovery.

All ten of the TSX's major sectors gained ground, with industrials advancing 1.8% and heavily-weighted financials up 1.3%.

Laurentian Bank of Canada shares fell 12.5% after the bank failed to find a buyer during a strategic review.

Another laggard was Dye & Durham Ltd. Its shares fell 19% after the company reported quarterly results.

(Reporting by Fergal Smith in Toronto and Khushi Singh; Editing by Tasim Zahid and Marguerita Choy)