TSX climbs back above 22,000 as resource shares rally

FILE PHOTO: The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

(Reuters) -Canada's main stock index rose for a third straight day on Monday, led by gains for commodity-linked shares, but the move was limited ahead of a U.S. Federal Reserve interest rate decision this week.

The Toronto Stock Exchange's S&P/TSX composite index ended up 42.38 points, or 0.2%, at 22,011.62, closing above the 22,000 threshold for the first time since last Tuesday.

"It's a quite low-volume trading day ahead of an important week," said Brandon Michael, senior investment analyst at ABC Funds. "Tomorrow's month-end, corporate earnings are still coming through, we have a U.S. Federal Reserve meeting and important economic data."

Inflation showing no recent sign of slowing or narrowing in scope leaves Fed policymakers challenged at Wednesday's rate announcement over how to characterize their next steps even as the countdown to a contentious U.S. presidential election continues.

Still, stock market bulls "do have reason to be optimistic," Michael said, pointing to positive technical indicators, better-than-expected corporate earnings and a strong economy.

The U.S. economy has showed signs of solid demand at the start of the year, while economists expect Canadian GDP data, due on Tuesday, to show a gain of 0.3% in February from January.

The energy sector added 0.7% even as the price of oil settled 1.5% lower at $82.63 a barrel.

Canada's Trans Mountain pipeline expansion is set to enter partial operation on May 1, years behind schedule and at more than four times the original cost - but with the potential to affect oil flows even outside North America.

The materials group, which includes metal miners and fertilizer companies, gained 0.6% as copper climbed to a two-year high.

Industrials were a drag, falling 0.4%, and real estate ended 0.6% lower.

(Reporting by Fergal Smith in Toronto and Purvi Agarwal in Bengaluru; Editing by Vijay Kishore and Alistair Bell)