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TSX edges higher

TORONTO (Reuters) - Toronto's main stock market index edged higher yesterday as financials were helped by hopes that a resolution to Greece's debt woes was near, but resource stocks were pressured by volatile commodity prices.

The heavily weighted TSX financials sector gained 1.3 percent as investors closed out short positions in expectation of a market rally if a European Union summit in Brussels today comes up with a deal to alleviate Greece's debt problems.

Royal Bank of Canada rose 1.8 percent to C$54.75, while Toronto-Dominion Bank climbed 1.3 percent to C$64.43.

European debt concerns have prompted a steep sell-off in global equity markets in recent sessions, but have reversed this week on reports that euro zone governments will unveil an aid plan. .

"Certainly, the Greece debt situation is a big factor on investors' minds...We've seen over the past few days, investors have been swinging between optimism and pessimism as far as that situation is concerned," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver. The Toronto Stock Exchange's S&P/TSX composite index ended the session up 12.09 points, or 0.11 percent, at 11,286.33. Earlier, the index fell by as much as 61.8 points.

Six of the 10 TSX subgroups ended higher, with weakness focused in the energy and materials sectors, as commodities such as gold and oil were hurt by a strengthening US dollar following comments from US Federal Reserve Chairman Ben Bernanke.

The US Federal Reserve could begin pulling back its unprecedented stimulus for the economy by first removing some cash from the financial system and then raising interest rates, Mr. Bernanke said yesterday.

"Bernanke is talking about beginning to reduce the liquidity in the US market," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"If you're in a world where everyone is still worrying about Greece and the impact of the financial crisis and the US is beginning to talk about what's the next step...that makes everyone nervous that that may be happening too soon."