TORONTO (Bloomberg) - Canadian stocks rose for a third day as financial shares rallied on a smaller-than-expected reduction in US jobs and a surprise increase in employment in Canada.

Suncor Energy Inc. rose the most in two weeks after saying it expects to eliminate about 1,000 jobs and cut spending after buying Petro-Canada. Royal Bank of Canada, the country's largest lender, rose 1.1 percent, while Manulife Financial Corp., North America's largest insurance company, added 2.3 percent.

The Standard & Poor's/TSX Composite Index rose 95.98 points, or 0.9 percent, to 11,017.47 at 4.10 p.m. in Toronto. The Canadian equity benchmark climbed the most in a month yesterday after gold prices rose and two banks beat analysts' earnings estimates. The index has risen 0.4 percent this week, after sliding the first two days on concern lending curbs in China would crimp demand for commodities.

"Less-bad economic data feels better," said Laura Wallace, who helps manage C$275 million at Toronto-based Coleford Investment Management Ltd. "We're coming from a time when economic figures were into freefall. So even mixed data points are enough to boost stock market optimism."

A US government report showed that the pace of job losses in the world's biggest economy slowed in August as signs emerged that the recession is ending, even as the unemployment rate reached a 26-year high. US employers cut 216,000 from payrolls, fewer than forecast, Labour Department data showed yesterday in Washington.

Canada recorded a surprise job gain in August, the first in four months, suggesting the country is emerging from its first recession since 1992. Canadian employment rose by 27,100 last month, Statistics Canada said. Economists surveyed by Bloomberg predicted a job loss of 15,000.

"A little good, a little bad," said Fred Ketchen, who oversees about C$100 million as managing director of equity trading at ScotiaMcLeod Inc. in Toronto. "Economic reports have been mixed, but already pointing to modest improvement. As much as we don't see so much excitement in the stock market, we probably won't get a sharp drop in stocks either."

Financial shares, which account for 32 percent of the S&P/TSX, led yesterday's gain, rising 1.3 percent on optimism that better-than-expected economic reports signal stronger consumer lending and lower loan losses.

Canadian financial institutions that have reported quarterly results since July 8 have beaten the average analyst estimate by 19 percent, the most among 10 industries, according to data compiled by Bloomberg.

Royal Bank rose 1.1 percent to C$56.40. Manulife added 2.3 percent to C$21.57.

Canadian Finance Minister Jim Flaherty said the world's largest economies should maintain planned stimulus measures because the economic recovery remains "fragile."

"We are far from through these uncertain times," Mr. Flaherty told reporters before a meeting of Group of 20 finance ministers and central bankers in London. "Any potential recovery at this stage is fragile and subject to further shocks."

Magna International Inc. gained 2.4 percent to C$47, while Linamar Corp. advanced 1.8 percent to C$12.50. Canada's government-owned Business Development Bank today said it will provide the country's auto parts makers with loans to cope with a sharp drop in demand.

Suncor advanced 2.9 percent to C$34. The country's biggest energy company said it expects about 1,000 people will leave through layoffs, retirements and discontinuation of contract positions by the middle of October. The company said it plans to cut capital spending by at least $1 billion and operational expenditures by $300 million or more annually following the acquisition, which was completed on August 1.

Raw-material shares had the biggest decline in the S&P/TSX, their first decrease in three days, as the Reuters/Jefferies CRB Index of 19 commodities fell 0.5 percent.

Barrick Gold Corp., the world's biggest producer of the metal, fell 0.4 percent to C$43.50 while Goldcorp Inc. fell 1.6 percent to C$44.95.

Eldorado Gold Corp. slipped 0.7 percent to C$12.22. Gold Fields Ltd. said it sold a stake in the Canadian producer of the metal in China for about $293 million.