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CANADA STOCKS-China reforms, Fed hopes lift TSX to two-year high

* TSX rises 20.90 points, or 0.16 percent, to 13,503.47

* Seven of the 10 main index sectors advance

* Energy, material shares drop with commodity prices

By John Tilak

TORONTO, Nov 18 (Reuters) - Canada's main stock index

climbed to a two-year high on Monday as China's plans to execute

a new reform agenda and hopes that the U.S. Federal Reserve will

stick with its easy monetary policy boosted market sentiment.

Weakness in gold and oil prices weighed on material and

energy stocks, however, overshadowing a rise in the financial

sector and limiting the market's gains.

With no major news hitting investors' screens over the

weekend, the focus remained on Fed Vice Chair Janet Yellen's

comments last week that she would support continuation of the

U.S. central bank's stimulus program. Yellen has been nominated

to be the Fed's next chief.

"We're basically just picking up the trends from last week,

with people reacting to Yellen's confirmation hearing,

suggesting that she's going to keep quantitative easing going

for a while," said Colin Cieszynski, senior market analyst at

CMC Markets Canada.

"The stock markets are being moved on the capital flowing in

from QE programs, and this time that money hasn't found its way

into commodities in the same way."

Canada's benchmark index was also riding a wave of world

stock market rises on Monday after the Chinese Communist Party

unwrapped surprisingly bold reforms late last week, pledging to

let the market play a "decisive" role in the economy.

The Toronto Stock Exchange's S&P/TSX composite index

was up 20.90 points, or 0.16 percent, at 13,503.47,

after touching 13,504.41, its highest level since July 2011.

"Over the longer term the trend for the TSX remains

positive, but until commodities get going it still may have

trouble catching up to its peers," Cieszynski said.

The TSX, despite gains in the last several weeks, is

trailing the rise of U.S. stock indexes this year.

Seven of the 10 main sectors on the index were higher on


Financial shares advanced 0.3 percent, with Toronto-Dominion

Bank adding 0.2 percent to C$97.52, and Bank of Nova

Scotia rising 0.2 percent to C$65.79.

But both of the index's natural resource groups slipped

along with commodity prices, with the materials sector down 0.4

percent and energy stocks losing 0.1 percent.

Miner Barrick Gold Corp gave back 1.1 percent to

C$18.70, and competitor Goldcorp Inc declined 0.3 percent

to C$25.32.

In corporate news, Fairfax Financial Holdings Ltd

will buy a majority stake in privately held Keg Restaurants Ltd,

which owns more than 100 steakhouse restaurants.

Keg Restaurants said the transaction will benefit The Keg

Royalties Income Fund, which gained almost 4 percent

to C$16.80. Fairfax shares fell 0.7 percent to C$424.89.