CANADA STOCKS-TSX rises as growth hopes overcome U.S. rate hike fear

Reuters

* TSX firms as central bank comments digested * Financials lead pack; gold miners and industrials slip By Alastair Sharp TORONTO, March 20 (Reuters) - Canada's main stock index turned higher after a sluggish start on Thursday as investors sought direction from recent comments from the Canadian and U.S. central banks.

On Tuesday, Bank of Canada Governor Stephen Poloz warned about a prolonged period of sluggish growth and low interest rates.

But on Wednesday, U.S. Federal Reserve Chair Janet Yellen raised the specter of an earlier-than-expected increase in interest rates in Canada's largest trade partner, providing both optimists and pessimists with ammunition as the U.S. economic recovery hangs in the balance.

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," Gavin Graham, chief strategy officer at Integris Pension Management Corp.

Canada's stock market is dominated by natural resource-related companies, some of the largest of which took a hit in early trade.

"Gold is taking a hit because it's felt there's less need for disaster insurance," Graham said. "But it's also some of the economically sensitive stocks like oil and gas, the rails, some of the pipeline stocks as well." Canadian Pacific Railway Ltd lost 1 percent to C$171.25 and pipeline company TransCanada Corp slipped 0.3 percent to C$50.13.

The financial sector, another big hitter on the Toronto stock market's benchmark index, offset those losses, however. In the group, Manulife Financial Corp was up 1.8 percent at C$21.43 and Sun Life Financial Inc added 1.4 percent to C$38.82.

The Toronto Stock Exchange's S&P/TSX composite index was up 30.51 points, or 0.21 percent, at 14,364.51 at midmorning after opening lower. Four of its 10 main sectors were in the red.

($1=$1.13 Canadian) (Reporting by Alastair Sharp; Editing by Peter Galloway)

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