TORONTO (Reuters) - The Toronto Stock Exchange's main index closed higher yesterday despite a drop in telecoms shares the day after the government's decision to encourage competition in the wireless market.

The telecoms sector was down 3.5 percent, and Rogers Communications Inc and Telus Corp. were the two biggest decliners by weight.

Rogers slid C$3.79, or 8.3 percent, to C$41.71, and Telus lost C$2.29, or 4.7 percent, to C$46.62. BCE Inc was also off, down 52 Canadian cents, or 1.3 percent, at C$39.20.

The government said after the market close on Wednesday it would set aside a block of spectrum for new competitors in an upcoming auction of airwaves, ensuring companies that want to enter the wireless market are able to do so.

In Wednesday's session, the index soared 263 points, the biggest one-day advance in November. Earlier in the month, the index tumbled, hurt by worries over the US economy and fallout from the troubled credit markets.

Yesterday, the S&P/TSX composite index closed up 31.74 points, or 0.23 percent, at 13,663.89 with seven of the TSX's 10 main groups higher.

On the upside, the energy sector gained 0.7 percent as the price of oil rose as high as $95.17 a barrel before giving back gains after Enbridge Inc said it expects to quickly restart its pipeline system after a deadly explosion in Minnesota.

Crude was up 39 cents at $91.01 a barrel. On the TSX, Petro-Canada was up 36 Canadian cents, or 0.7 percent, at C$49.34, and Suncor Energy rose 47 Canadian cents, or 0.5 percent, to C$97.50.

Financials gained 0.6 percent after Toronto-Dominion Bank reported a better-than-expected fourth-quarter profit. TD rose C$1.42, or two percent, to C$71.80.

But National Bank of Canada swung to a fourth-quarter loss, sending its stock down 57 Canadian cents, or 1.1 percent, to C$53.68.

The small health-care sector climbed 4.1 percent after US private equity firm TPG Capital said it will buy Axcan Pharma for $1.3 billion.