TORONTO (Bloomberg) - Canadian stocks rose to the highest in seven weeks, led by financial companies, after two of the country's biggest banks had better-than-expected earnings, and one raised the dividend.

Royal Bank of Canada paced financial companies' gains, after its results exceeded analysts' estimates, on higher earnings at its consumer banking business. Toronto-Dominion Bank skirted sub-prime-related writedowns and increased its dividend, even as it posted a drop in profit. Commodity producers such as Suncor Energy Inc. fell along with oil and grains.

"We saw strong results out of Royal Bank as well as TD Bank on Canadian retail banking," said Juliette John, a portfolio manager at Bissett Investment Management in Calgary, which manages about C$16 billion including bank shares. "Overall the core businesses are sound and we are comfortable with the way that they are positioned."

The Standard & Poor's/TSX Composite Index added 1.6 percent to 13,750.48, the highest level since July 8. Canada's benchmark, which derives three-quarters of its value from finance and resource stocks, has still slid nine percent from its June peak as commodity prices fell on speculation that banks' credit losses would slow global growth and resource demand.

Royal Bank added 6.3 percent to C$48.13. The country's largest lender said third-quarter profit fell 9.5 percent to C$1.26 billion ($1.21 billion), on rising loan losses and additional writedowns tied to US mortgage debt. Royal earned C$1.14 a share excluding one-time items, National Bank Financial analyst Robert Sedran said, beating his C$1.05 estimate.

Toronto-Dominion gained 5.4 percent to C$62.56. Canada's second-biggest bank reported that third-quarter net income fell 9.6 percent to C$997 million, missing analysts' estimates as more borrowers fell behind on loans. Excluding one-time items, profit was C$1.43 a share, falling short of the C$1.45-a-share median estimate of analysts in a Bloomberg poll.

Toronto Dominion, the only one among Canada's six biggest banks to have avoided sub-prime-related writedowns, raised its quarterly dividend by two cents to 61 cents a share.