By John Tilak
TORONTO (Reuters) - Canada's main stock index advanced on Thursday, helped by gains in most major sectors, as U.S. economic data lifted investor sentiment and eased concerns about the recovery in the world's largest economy.
At the same time, the market cheered comments from a Federal Reserve official who said the U.S. central bank's asset purchases would be more aggressive than the timeline outlined last week if U.S. economic growth and the labor market turn out weaker than expected.
Further boosting the mood was data showing German unemployment dropped unexpectedly in June and that Britain did not suffer a double-dip recession early last year as previously thought.
The index's gains was limited by declines in telecoms stocks, which fell for the second straight day after reports that U.S. giant Verizon Communications Inc
On the data front, U.S. consumer spending rebounded in May and new applications for unemployment benefits fell last week, suggesting the U.S. economy remained on a moderate growth path.
"The data into the second quarter has continued to show a nice improvement in the U.S. economy," said Colin Cieszynski, senior market analyst at CMC Markets Canada.
"A solid economy that can stand on its feet does not need quantitative easing," he added. "If the economy improves to a point where that goes away, it's actually a good thing."
The Toronto Stock Exchange's S&P/TSX composite index <.gsptse> closed up 53.88 points, or 0.45 percent, at 12,005.78.
Eight of the 10 main sectors on the index were higher.
The materials sector, which includes mining stocks, rose more than 1 percent, with gold-mining stocks climbing. Barrick Gold Corp was up 0.5 percent at C$15.57, and Goldcorp Inc
Energy shares added 0.3 percent, helped by higher oil prices.
Financials, the index's most heavily weighted sector, rose 0.2 percent. Bank of Nova Scotia
Aimia's shares were up 10.6 percent at C$15.40. CIBC
The telecoms group slipped 0.7 percent. Telus Corp
Canada's large telecoms players have had it good without any serious competition except with each other, Cieszynski said.
Verizon's entry could potentially be "a pretty big shakeout," he added. "Verizon is a major company with very deep pockets, very familiar with competing in the North American telecoms marketplace."
Despite Thursday's gains, the benchmark Canadian index is down 3.4 percent since the start of the year.
The sentiment for Canadian stocks is "mediocre at best," said Philip Petursson, managing director, portfolio advisory group, at Manulife Asset Management. "I don't think investors are embracing Canadian equities as they once used to."
(Editing by Peter Galloway and Leslie Adler)