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CANADA STOCKS-TSX turns positive, gains tempered by resources, SNC

* TSX up 8.75 points, or 0.7 percent at 12,940.21

* Energy and financials led 7 of 10 main groups higher

* Materials and industrials dragged lower by gold miners,

SNC-Lavalin

By Solarina Ho

TORONTO, Oct 16 (Reuters) - Canada's main stock index turned

higher at midmorning on Wednesday, but gains were capped by weak

materials stocks and a sharply lower earnings revision by

SNC-Lavalin Group Inc.

Most of the TSX tracked U.S. equity markets, which rose on

optimism that a fiscal deal that would prevent the country from

defaulting on its debt could be wrangled between Washington

lawmakers at the eleventh-hour.

"The U.S. market is popping up on the upside, so I guess

they're optimistic, and it'll eventually drag us up," said Paul

Hand, managing director at RBC Capital Markets.

The heavily weighted financials and energy group were up 0.3

percent and 0.5 percent respectively.

Brent crude oil prices rose above $110 a barrel, while U.S.

crude rose to $101.72 per barrel on U.S. budget hopes. Meg

Energy Corp rose 4.1 percent to C$35.72, while Encana

Corp gained 0.9 percent to trade at C$18.47.

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

was up 8.75 points, or 0.7 percent at 12,940.21, at

midmorning. Seven of the index's 10 main groups were in positive

territory.

Tempering advances was a 1 percent drop in materials stock.

Gold miners in particular, retreated, with Agnico Eagle Mines

Inc off 3.2 percent at C$24.93 and Goldcorp Inc

off 1.9 percent at C$24.49.

Bullion prices retreated as investors moved away from the

safe-haven metal amid prospects of a last-minute U.S. debt deal.

Still RBC's Hand said bullion prices have been very volatile

of late. "Gold is becoming very hard to prognosticate," said

Hand.

SNC-Lavalin shares took a 5.2 percent hit to trade

at C$41.84 after the Canadian engineering and construction firm

said it slashing its fiscal 2013 outlook. The overall

industrials group was off 0.4 percent.