TSX hits two-week high on Monday on materials, energy stock gains

By Maiya Keidan

TORONTO (Reuters) - Canada's resource-heavy main stock index ended Monday's trading session at two-week high, led by gains in the materials and energy sectors in quiet end-of-summer trading.

The Toronto Stock Exchange's S&P/TSX composite index rose by 189.39 points, or 0.95%, to 20,025.14, hitting its highest since Aug. 15.

Traders await a slew of economic data from Canada and the U.S. this week.

"Today TSX is outperforming a little bit on the back of financials and commodities and gold," said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management.

"It's also the dog days of summer," she said. "Markets are going to lurch up and down for the rest of the week ahead of a long weekend."

In the U.S., Wall Street's S&P 500 index rose on Monday, adding 0.6%.

Energy was up 1.5%, as oil prices held steady on Monday, pressured by worries further U.S. interest rate hikes could dent demand but supported by a potential supply disruption from a tropical storm off the U.S. Gulf Coast.

China reduced the 0.1% stamp duty on stock trading effective Monday in the latest attempt to boost the struggling market as a recovery sputters in the world's second-biggest economy.

The materials sector, which includes precious and base metals miners and fertilizer companies, gained 2.1%.

The heavily weighted financials sector gained 1.1% as major Canadian banks are set to continue to report earnings this week while rate-sensitive technology stocks rose 0.7%.

"Financials in Canada have really gotten sold down and they're trading at valuations that are very attractive," said Avigdor. "They're below their long-term average valuation. The banks long-term will do OK. They're very highly correlated with the economy."

Canada's second-quarter GDP report on Friday is likely to show a sharp slowdown in economic growth, a Reuters poll of economists found, which could lead the Bank of Canada to pause interest rate hikes.

(Reporting by Maiya Keidan; Editing by Cynthia Osterman)