TORONTO (Reuters) - Toronto's main stock index eked out a small gain yesterday, ending a three-session streak in negative territory, as a rise in financials on hopes generated by U.S. home sales data offset commodity stock weakness.

But it was a largely directionless day that saw the index trade in a 123-point range from trough to peak. About an hour before the session ended, the big financial services sector gained momentum, tracking optimism in the US over a surprise jump in December pending home sales.

A report there showed buyers were lured back into the market by lower prices and mortgage rates. The sector finished up 0.7 percent. "The home sales is a very important number because the thing is that's sort of where the problem really originated," said Robert Floyd, president R.A. Floyd Capital Management Inc.

"If we're starting to see a little bit of strength there it's a little encouraging because that's the one area where we really have to see a turnaround occur for this marketplace to get better." The S&P/TSX composite index closed up 3.80 points, or 0.04 percent, at 8,628.63, with four of its 10 main groups higher. The pop into positive territory came after 4 p.m. Earlier, the index fell nearly one percent.

Heavily-weighted names on the upside included Royal Bank of Canada, up two percent at C$30.85, and Bank of Nova Scotia, which climbed 1.3 percent at C$30.19.

On the downside, the energy and materials sectors fell 0.3 percent and 0.14 percent respectively. Utilities sank 1.2 percent. Information technology fell 1.4 percent with Research in Motion down 1.8 percent at C$68.27.

Gold company Barrick Gold was down 1.5 percent at C$44.12, and Goldcorp fell 1.8 percent at C$34.80. In the oil patch, EnCana Corp dropped 1.2 percent at C$55.20.

Floyd said the flat trading day suggests the market may also be waiting to digest more corporate earnings results before making any big moves.

As well, there is a lack of direction due to a "great deal of uncertainty out there", said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier. "There's not enough conviction to carry the index higher," he said.