TSX higher as oil prices boost energy shares

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(Reuters)

By Irene Kuan

TORONTO (Reuters) - Toronto's main stock index held on to slim gains on Wednesday morning as soft U.S. data cut into an early rally that saw the TSX climb to its highest level in 13 months on strength in energy issues.

Pipeline company Enbridge Inc was up 1 percent at C$44.53, while Nexen Inc, Canada's No. 4 independent oil explorer, rose 0.6 percent to C$27.02.

The rally in energy stocks came as oil prices rose to near $80 a barrel after an industry report showed U.S. crude oil stocks dropped steeply last week.

"The commodities are strong. Gold is better, oil is better, the Canadian dollar is better. A lot of that has spread over into the metals market and gold market," said Bruce Latimer, trader at Dundee Securities.

At 10:35 a.m. (1535 GMT) The S&P/TSX composite index was up 14.97 points, or 0.12 percent, at 11,644.47. Earlier, it rose as high as 11,702.25, which marked its highest level since October 2008.

But much of that early gain was undercut by an unexpected fall in new U.S. home construction, which sparked worries about the strength of an economic recovery. That weighed on U.S. stocks and hit sentiment in Canada.

Also capping the early gains were shares of Research In Motion, which fell 2.3 percent to C$63.05 after BMO Capital Markets downgraded the BlackBerry maker to "market perform" from "outperform," citing concerns about its 2011 earnings.

(Reporting by Irene Kuan; editing by Rob Wilson)