Financials help lift Toronto market to 8-day high

By Fergal Smith

(Reuters) -Canada's main stock index rose to an eight-day high on Tuesday, as heavily weighed financial shares notched gains ahead of a Federal Reserve interest rate decision this week that could set the stage for lower borrowing costs in the United States.

The Toronto Stock Exchange's S&P/TSX composite index ended up 45.1 points, or 0.2%, at 22,824.67, its highest closing level since July 22.

In contrast, the S&P 500 and Nasdaq stumbled, weighed down by weak chip and megacap shares ahead of earnings from some of the heavyweight tech companies that have led gains for U.S. indexes this year.

"This is one of those days you can really see the difference in weighting between the U.S. and Canada," Colin Cieszynski, chief market strategist at SIA Wealth Management. "Today you see tech stocks getting hammered and the TSX is actually doing ok."

Technology accounts for 10% of the TSX's market capitalization, much less than the 30% share accounted for by financials.

Bond investors expect the Fed to hold interest rates steady on Wednesday but signal that rate cuts are imminent. The Bank of Canada has already begun an easing cycle.

"Interest rates coming down would be generally ok for bank stocks as long as it's because we are beating inflation and not because the economy is going off the rails," Cieszynski said.

Financials rose 0.4%, while utilities, which is dominated by high-dividend paying companies that could particularly benefit from lower interest rates, added 0.6%.

Filo Corp was a standout. Its shares surged 8.8% after Lundin Mining and global miner BHP Group reached a deal to jointly take over the company. Shares of Lundin Mining ended 2.6% lower.

Tilray Brands Inc shares climbed 7% after the cannabis firm reported upbeat fourth-quarter revenue.

(Reporting by Fergal Smith in Toronto and Shubham Batra in Bengaluru; Editing by Maju Samuel and Marguerita Choy)