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The close: TSX notches four-month high as oil price rise boosts energy

A Bay Street sign hangs in front of the CN Tower in the financial district in Toronto.

Mark Blinch/Globe and Mail

Canada's main stock index rose to a four-month high on Monday as higher oil prices boosted energy shares, while the heavyweight financials group also gained, offsetting declines for industrial and information technology names.

The Toronto Stock Exchange's S&P/TSX composite index closed up 62 points, or 0.4 per cent, at 15,516.23, its highest close since May 12.

Gains for the index came despite a sell-off in technology shares and North Korea tensions that weighed on Wall Street.

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"Canada is getting a little bit more attractive from a valuation standpoint," said James Robertson, managing director, portfolio solutions group at Manulife Asset Management. "You are starting to see more capital moving into Canada."

The Toronto market has been held back this year by the lower price of oil, one of Canada's major exports, and a stronger Canadian dollar.

But the loonie retreated ahead of a speech on Wednesday by Bank of Canada Governor Stephen Poloz, while U.S. crude oil prices reached their highest since April, settling up 3.1 per cent at $52.22 a barrel.

The energy group climbed 1.7 per cent, with Pembina Pipeline Corp rising 3.4 per cent to C$43.55 and Encana Corp advancing 1.7 per cent to C$14.13.

Five of the index's 10 main groups ended higher, with financials gaining 0.2 per cent.

"I think the negativity around the financial names has dissipated, Robertson said.

Investors have worried that a slowdown in Canada's housing market will hold back loan growth for banks.

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The materials group, which includes precious and base metals miners and fertilizer companies, added 0.7 per cent as safe-haven buying of gold helped boost gold mining shares.

Bombardier Inc extended previous losses to hit a more than four-month low on news that Siemens AG will likely choose French rival Alstom SA over the Canadian company in a multibillion-dollar rail merger.

Montreal-based plane and train maker Bombardier is also awaiting a U.S. court ruling, expected to be made public on Tuesday, on a CSeries dumping complaint by Boeing Co.

Bombardier shares pared some earlier losses but still fell 4.0 per cent to C$2.14, while the overall industrials retreated 0.3 per cent.

The technology group declined 1.1 per cent, with Shopify Inc falling 4.6 per cent to C$141.64.

Air Canada, which counts fuel as one of its major costs, lost 7.3 per cent to C$25.50.

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Wall Street falls on tech selloff, North Korea concern

Wall Street dipped on Monday, as a selloff in technology shares weighed heavily on the Nasdaq, while the most recent statement from North Korea's to Washington added to a cautious tone.

North Korea's foreign minister said President Donald Trump had declared war on the country and it reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its airspace.

The White House disputed the declaration, calling the suggestion "absurd."

The comments buoyed safe-haven assets, those that are favoured by investors in times of crisis, with gold up 1 per cent and the Japanese yen strengthened 0.26 per cent versus the greenback at 111.71 per dollar.

"The North Korea narrative is not going away and the longer it remains part of the conversation, the more negative it becomes," said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

The CBOE Volatility index <.VIX>, a widely followed measure of market anxiety, hit a 2-week high of 11.21 and was last up 0.63 points at 10.22.

Tech names such as Facebook , off 4.5 per cent, Microsoft , down 1.55 per cent, and Apple , off 0.88 per cent, were among the biggest drags on the benchmark S&P 500 index.

Apple shares flirted with correction territory following a report that the company had told suppliers to scale back shipments of parts for its upcoming iPhone X.

"There has been some disappointment in the reception of Apple's latest iPhone release, and that is driving some concern and that is bleeding through to the supply-chain names," said Kenny.

The S&P technology index <.SPLRCT> slid 1.42 per cent, its worst daily performance in five weeks. The index remains the best performing of the 11 major S&P sectors this year, however, with a rise of nearly 23 per cent.

The losses in tech were offset somewhat by a sharp climb in the energy sector, which gained 1.47 per cent. The sector notched its sixteenth gain in the last 18 sessions.

Oil prices hit a more than two-year high after major producers said the global market was on its way towards rebalancing, while Turkey threatened to cut oil flows from Iraq's Kurdistan region towards its ports.

The Dow Jones Industrial Average <.DJI> fell 53.84 points, or 0.24 per cent, to 22,295.75, the S&P 500 <.SPX> lost 5.56 points, or 0.22 per cent, to 2,496.66 and the Nasdaq Composite <.IXIC> dropped 56.33 points, or 0.88 per cent, to 6,370.59.

Genuine Parts shares jumped 5.96 per cent as the best performer on the S&P 500 after the car parts distributor said it would enter the European market with a deal to buy peer Alliance Automotive Group for about $2-billion.

Allergan was up 3.40 per cent after the drugmaker authorized a $2-billion buyback of its shares.

Advancing issues outnumbered declining ones on the NYSE by a 1.28-to-1 ratio; on Nasdaq, a 1.26-to-1 ratio favoured decliners.

About 6.42 billion shares changed hands in U.S. exchanges, above the 6.02 billion daily average over the last 20 sessions.

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