By Fergal Smith
TORONTO (Reuters) - Canada's main stock index on Tuesday rose to its highest level in nearly two weeks as financial markets took in stride testimony from Federal Reserve Chair Jerome Powell that interest rates are likely to rise this year.
The Toronto Stock Exchange's S&P/TSX composite index ended up 202.49 points, or 0.96%, at 21,274.81, its highest close since Dec. 30 and above its 2021 closing level of 21,222.84.
U.S. stock indexes also gained ground as investors appeared relieved that Powell's testimony to Congress did not include any major surprises. The prospect of faster-than-expected Fed tightening has weighed on stocks over the past week.
"We are normalizing (interest rates) because of a high class problem - growth," said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management. "People have savings and tend to have pent-up demand."
"The sectors that work in this environment are very Canadian-centric," Avigdor added.
Financials, which tend to benefit from higher interest rates, and resource shares account for 57% of the Toronto market.
Energy climbed 3.3%, helped by a jump in oil prices. U.S. crude oil futures settled 3.8% higher at $81.22 a barrel on hopes the spread of the Omicron coronavirus variant will not derail a global demand recovery.
Financials advanced 1.2%, while the technology sector ended a six-day losing streak with a gain of 1.3%. It was helped by a 8.9% jump in the shares of electronic payment technology company Nuvei Corp.
The TSX rallied 22% in 2021, its best yearly performance since 2009, supported by massive stimulus, vaccine rollouts and hopes of a global economic recovery.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Chris Reese)