TORONTO (Reuters) - The benchmark index of the Toronto Stock Exchange rose as the price of oil surged above $80 a barrel for the first time and spurred investors to bid up energy shares.

The S&P/TSX composite index gained 52.44 points, or 0.38 percent, to close at 13,756.72.

Only three of the 10 main subgroups of the composite declined, including the key materials group, which inched 0.35 percent lower.

Energy shares advanced 1.46 percent during the session. As well, financials eked out a 0.04 percent gain.

The S&P/TSX 60 index of Canadian blue chips added 3.40 points to finish at 798.37.

"Generally, I think the news of the day really is the strength of oil," said Paul Taylor, chief investment officer at BMO Harris Investment Management.

October crude hit a record $80.18 a barrel on the New York Mercantile Exchange, the highest since NYMEX began trading oil futures in early 1983.

This translated into healthy gains for Canada's energy sector. Interoil rose C$2.89, or 8.4 percent, to C$37.41, and Suncor Energy rose C$1.57, or 1.7 percent, to C$96.32.

The gains in oil come as equity investors continue to adjust to the volatility that has emerged as a byproduct of the credit crunch that has been gripping debt markets.

Cental banks are scrutinising what impact the credit crunch may have on the health of the global economy. Investors are expected to pay close attention to what the US Federal Reserve decides to do about interest rates when it meets on September 18.

"I think they're certainly waiting for that with baited breath and they're all looking for that reduction in rates," said Adrian Mastracci, portfolio manager at KCM Wealth Management Inc in Vancouver.

However, he cautioned that because of a weak US jobs picture, overhanging credit worries and high energy prices, all will not be made well by a Fed rate reduction.

"Even if the Fed cuts the rates, we're not out of the woods," he said. "All of that is going to weigh on the economy sooner or later."

Taylor said he expects the Fed will reduce rates, though the question remains how deep the cut will be.

"We believe that there is a meaningful slowing coming as a result of the overhang in the US housing market," he said. "The Fed cannot be oblivious to that."