CANADA STOCKS-TSX drives higher but closes off 7-month high
* TSX rises 1.3 pct to finish at 10,232.44
* Energy, materials lead rally
* Profit-taking pares market's early gains (Adds details, quotes, updated numbers)
TORONTO, May 20 (Reuters) - Toronto's main stock index climbed more than 1 percent on Wednesday, boosted by rising oil and gold prices, but it pared stronger early gains as investors took profits after a sharp two-day rise.
The index rose by as much as 2.6 percent shortly after the open, touching a seven-month peak of 10,365.39, as oil charged to a six-month high above $62 a barrel, while gold climbed to an eight-week high above $940 an ounce.
Energy issues rose 2.17 percent, while the mining-heavy materials sector climbed 3.03 percent, largely on the back of gold stocks.
"Pretty much everything in terms of commodities is up, so that sort of says in a word what drives the Canadian market," said Ian Nakamoto, director or research at MacDougall, MacDougall & MacTier.
Among materials stocks, Yamana Gold (YRI.TO) surged 7 percent to C$11.42, while Goldcorp (G.TO) climbed 6.3 percent to C$42.14. Stronger copper prices also boosted the sector.
In the energy subgroup, Suncor Energy (SU.TO) rose 3.4 percent to C$36.26, while UTS Energy (UTS.TO) gained 4 percent to C$1.57.
All told, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE rose 131.49 points, or 1.3 percent, to finish at 10,232.44.
Bruce Latimer, a trader at Dundee Securities, said the pullback from the big early gains was not unexpected, given the 3.5 percent rise in the previous session.
"We've had a heck of a run over the last eight weeks, and to have the the odd day of giveback is not out of the ordinary, especially when we had a big day on Tuesday, which I think caught a lot of people off guard," he said.
The index has risen 35 percent since early March, as improving economic data and signs that credit markets are thawing have prompted hopes a recovery may be around the corner.
However, doubts about strength of the economy mean the market is still not out of the woods, said Nakamoto.
"I think there's still a great deal of skepticism out there ... meaning if you've got a profit now, better to take it now," he said. Continued...
