TORONTO (Reuters) - Toronto's main stock index rose to an 18-month high yesterday before paring gains, as rising oil prices and firm US economic data bolstered hopes for a sustained recovery.

Investors welcomed fresh reports that showed the US services sector grew above expectations in March and pending homes sales accelerated more than anticipated in February.

The reports reinforced optimism stirred by Friday's news that US non-farm payrolls had risen at the fastest pace in three years, the strongest signal yet that the US economic recovery is gaining a solid footing.

The brightening economic outlook helped push oil to an 18-month high yesterday, rising above $86 a barrel and sent the TSX's heavily weighted energy sector up 1.85 percent. Suncor Energy Inc. and Canadian Natural Resources each gained more than two percent.

The Toronto Stock Exchange's S&P/TSX composite index finished up 35.29 points, or 0.29 percent, at 12,186.35. Earlier, it hit 12,203.39, its highest since September 2008.

Suncor Energy Inc. shot up 2.62 percent to C$35.22 and Canadian Natural Resources jumped 2.12 percent to C$79.89.

The day started strongly with all sectors advancing. Eight of 10 main groups ended higher.

"Towards the end of the day here we're probably having some sober second thoughts as people take some profits for the day," said Michael Sprung, president at Sprung & Co. Investment Counsel.

"There is a realisation out there that not everything is smooth sailing at the moment. The global economy still has to deal with Greece, Portugal and their compatriots," he said, referring to debt woes faced by some European countries.

With most European markets closed yesterday for an extended Easter long weekend, market volumes were also lighter than usual.