CANADA STOCKS-Bank rally drives TSX to higher close

* TSX rises 33.91 points to 10,389.76

* Banks get credit for higher close

* TSX ends week with 0.99 percent gain (Adds details, comments and official numbers)

By Frank Pingue

TORONTO, June 26 (Reuters) - Toronto's main stock index followed its heavyweight financial shares to a higher close on Friday, helped by U.S. data that offered further evidence that recession may be losing its grip on the economy.

The financial sector, which accounts for about a third of the index, rose 1.85 percent to its highest closing level since early November after data showed U.S. consumer spending rose in May for the first time since February. [ID:nSP432665]

Shares of Toronto-Dominion Bank (TD.TO), the biggest driver behind the gain, rose 3.3 percent to C$60.57, while Royal Bank of Canada (RY.TO) shares ended up 2.2 percent at C$47.54.

"My sense is that it's a response to the positive U.S. data this morning," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"The fact that consumers in the States have actually made a very rapid adjustment to this new environment suggests to me that we will see consumers spending at a pretty normal pace."

The gain in the TSX index would have been much greater if not for the slide in its energy and materials sectors, both of which fell as commodity prices backed off recent highs.

Still, the S&P/TSX composite index .GSPTSE closed 33.91 points, or 0.33 percent, higher at 10,389.76. Seven of its 10 sectors ended higher.

For the week, the index rose 0.99 percent, a big turnaround from the lowest point in the week, on Tuesday, when it was down 5.4 percent after the World Bank said that prospects for the global economy remained "unusually uncertain". [ID:nSGP000012]

Also helping to boost the TSX were investors positioning themselves ahead of month-end, and two holidays next week. The TSX will be closed on Wednesday, July 1, for Canada Day, while U.S. markets will be closed on Friday, July 3, for Saturday's July 4 Independence Day holiday.

Among the energy shares that weighed on the TSX were EnCana Corp (ECA.TO), which fell 1.3 percent to C$56.81, and Suncor Energy (SU.TO), which dropped 0.8 percent to C$34.88.

The energy sector ended the session down 0.87 percent.

Trade is expected to be choppy in coming weeks as reports may continue to offer differing views on where the global economy is headed.

Two reports released this week had opposite influences on equities. The World Bank painted a dark picture while the Organization for Economic Co-operation and Development said the global downturn is close to a bottom.

"What we are seeing is an increase in the number of small signs that say things are beginning to be better so I would expect the trend to be positive," Warne said.

"But I think the real characterization is going to be every time there is a little piece of news it's going to lead to a large reaction and it's going to be very difficult to discern that underlying sense that things actually are getting slightly better."

($1=$1.15 Canadian) (Editing by Peter Galloway)