Canada's main stock index hit a one-week high on Tuesday, underpinned by gains in energy shares, as concerns around the Omicron coronavirus variant eased.

At 9:40 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was up 266.07 points, or 1.28%, at 21,127.17, extending previous session's gains.

The energy sector climbed 2.9% with oil prices rising for a second day as concerns over the impact of the Omicron coronavirus variant on global fuel demand eased.

"People referred to this period as a Santa Claus Rally and I see some of that taking place now as we hit the end of the year and investors who were heavy in cash, or who missed the market might feel compelled to invest money," said Irwin Michael, a portfolio manager at ABC Funds.

Toronto index up as energy stocks boost

Adding to gains were Toronto-listed technology stocks , up 2.7%, tracking gains in US tech-heavy Nasdaq index.

Following a volatile start to December marked by concerns about the Omicron coronavirus variant and a hawkish outlook from the United States Federal Reserve, the benchmark index has gained ground this week as investors believe the recent sell-off was overdone.

Among individual shares, Enbridge Inc gained 1.9% after the pipeline operator forecast higher core earnings in 2022 and announced a share repurchase of up to C$1.5 billion ($1.18 billion), betting on rising demand for oil and gas.

On the economic front, Canada posted a trade surplus of C$2.09 billion ($1.65 billion) in October, the largest in almost 10 years, Statistics Canada said.

Highlights

Dye & Durham Ltd was the biggest percentage gainer on the index after multiple brokerages raised the price target on the IT service provider's stock.

The TSX posted two new 52-week highs and no new low.

Across Canadian issues, there were seven new 52-week highs and seven new lows, with total volume of 48.42 million shares.