Canadian stocks rose on Tuesday, with the benchmark TSX index set for its seventh straight month of gains on optimism over a global economic recovery aided by stimulus measures and vaccination.

The Toronto Stock Exchange's S&P/TSX composite index climbed 0.3% to 20,657.23, boosted by a more than 1% rise in industrials and healthcare stocks. The heavyweight financial index gained 0.2%, rebounding from previous session's losses.

The TSX index is on course to end August with a near 1.8% gain, its longest monthly winning streak since 2017. US Federal Reserve chair Jerome Powell's dovish remark on stimulus tapering and rebound in commodities helped investors remain confident in a global economic recovery.

"I expect some form of volatility in September and October as we get more clarity on what the central banks are going to do and we still have to watch how the virus acts when the schools start reopening," said Gregory Taylor, portfolio manager at Purpose Investments.

Toronto stocks slip as oil drops from four-week high

"We're making it through August, but I don't think we're out of the woods yet."

Energy index fell 0.4% as oil prices fell ahead of OPEC and allies' meeting on Wednesday.

Technology index gained 0.2% to hit another record high, and were set be the best performing sector in August.

Adding to virus woes, the US State Department has raised its travel advisory alert for Canada to a "level?4?-?do not travel" status amid the ongoing COVID-19 pandemic.

Oil edges lower as US pushes OPEC to pump more

Investors largely shrugged off data that showed Canada's economy unexpectedly shrank in the second quarter, while a likely contraction in July will leave economic activity about 2% below pre-pandemic levels.

HIGHLIGHTS

The largest percentage gainer on the TSX was fuel-cell products developer Ballard Power Systems Inc, up about 4%.

Stelco Holdings Inc fell 1.4%, the most on the TSX.

The TSX posted four new 52-week highs and no new lows.