CANADA STOCKS-TSX gains as banks, insurers seen gaining from Fed

* TSX firms as U.S. Fed comments signal earlier rate hike
    * Financials lead pack; industrials slip

 (Adds strategist comment, updates prices to close)
    By Alastair Sharp
    TORONTO, March 20 (Reuters) - Canada's main stock index
gained ground on Thursday with financial stocks leading the way
as investors bet on higher U.S. interest rates and economic
recovery helping insurers and domestic lenders.
    Financial companies took four of the top five spots on the
list of positive index movers, a day after the U.S. Federal
Reserve raised the specter of an earlier-than-expected increase
in interest rates in Canada's largest trade partner. 
    "If (U.S.) interest rates go up a little faster than
anticipated that is generally good news for bank interest
margins," said Elvis Picardo, strategist at Global Securities.
    "For insurers especially, higher bond yields makes a big
positive difference to their portfolios, and so does the
recovery in equity markets," he added.
    Insurer Manulife Financial Corp jumped 2.6 percent
to C$21.61 and peer Sun Life Financial Inc added 1.7
percent to C$38.91.
    Royal Bank of Canada, the country's biggest lender,
added 0.5 percent to C$72.19 and Toronto-Dominion Bank 
rose 0.4 percent to C$51.80.
    On Tuesday, Bank of Canada Governor Stephen Poloz warned
about a prolonged period of sluggish growth and low interest
    "If you look at a bank like TD, I believe it has more
branches in the U.S. now than it has in Canada," Picardo said.
"The Canadian banks have been making inroads into the U.S. in
the last 5 years."
    U.S. equities have hit record highs during an extended
period of low interest rates and monetary stimulus that appears
to be coming to an end, but talk about higher rates also signals
that the Fed expects the U.S. economy to expand.
    "You would anticipate, all other things being equal, that
Canada is going to do OK and even maybe quite well because if
they (the U.S.) are doing well they are going to need more of
the stuff we make and produce," said Gavin Graham, chief
strategy officer at Integris Pension Management Corp.
    Canada's stock market is dominated by natural
resource-related companies, which had a mixed day.
    "Gold is taking a hit because it's felt there's less need
for disaster insurance," Graham said. 
    Canadian Pacific Railway Ltd lost 1.7 percent to
C$170.12 and Canadian National Railway Co slipped 0.5
percent to C$62.84.
    The Toronto Stock Exchange's S&P/TSX composite index
 ended the session up 27.79 points, or 0.19 percent, at
14,361.83. Half of its 10 main sectors gained on the day,
included the three biggest groups.
    ($1=$1.13 Canadian)

 (Reporting by Alastair Sharp; Editing by Peter Galloway and
Phil Berlowitz)