TORONTO (Reuters) - Toronto's main stock index rose sharply yesterday, gaining for the third straight session, as the financial sector surged on, thanks to Bank of Montreal's earnings and rosy US economic data.

The rally by financial issues and data showing US consumer confidence soared in May to its highest level in eight months, overcame early weakness in resources that had pushed the TSX lower at the open.

"US confidence numbers came out really, really strong. This kind of validated what people were feeling, which was 'Hey, maybe things aren't so bad now'," said Rick Meslin, head of Canadian equities at UBS.

The buoyant mood, coupled with earnings from Bank of Montreal that topped expectations helped send the financials sector up 4.6 percent.

BMO rose 5.2 percent to C$43.71, while other financial issues climbed on expectations they too would notch healthy profits.

Royal Bank of Canada climbed 5.6 percent to C$45.05, while Bank of Nova Scotia added 5.5 percent to C$38.81. Insurer Manulife Financial rose 4.6 percent to C$23.12.

The S&P/TSX composite index finished up 216.40 points, or 2.15 percent, at 10,285.90, its highest close since early October. Eight of the TSX's 10 main groups were higher.

"Across the board, you're seeing that fear to some extent is being replaced by confidence," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.

"We're looking for it on the part of the institutional level, on the part of corporate America and at the consumer level. And the consumer confidence numbers are indicating a better feel."

The consumer confidence figures helped boost the energy group, up 1.9 percent, as the price of oil settled higher at $62.45 a barrel.

Canadian Natural Resources rose 3.3 percent to C$62.36, while Suncor Energy climbed 2.7 percent to C$36.62.

The materials sector slipped 0.05 percent, with Barrick Gold down 3.7 percent at C$41.19. Utilities fell 0.6 percent.