TORONTO (Reuters) - Toronto's main stock index eked out a small gain yesterday, closing higher for a second straight session, lifted by strength in financials and gold miners.

The financial sector rose 0.4 percent, with Bank of Montreal up 0.4 percent at C$59.40, and Royal Bank of Canada up 0.5 percent at C$58.05.

US bank shares rose yesterday, and Canadian banks followed their lead, as bipartisan talks on an overhaul of financial regulation failed in the US Senate. Gold-mining shares firmed on largely steady gold prices. Gains were kept in check by lingering concerns about possible monetary tightening in China. Barrick Gold added one percent to finish at C$40.05.

Threatening to pull the market lower was the base-metals sector, which weakened on concern that higher Chinese inflation would spawn interest rate hikes, which would slow Chinese economic activity and demand for resources.

Teck Resources dropped 1.4 percent to C$41.03, and copper miner Quadra Mining fell 2.2 percent to C$17.19.

The Toronto Stock Exchange's S&P/TSX composite index finished the day up 18.64 points, or 0.16 percent, at 11,979.7.

The index traded in a tight range and hovered at the break even level for most of the day with no real drivers.

"I think there's a stalemate between those that think the market are going higher and those that think they've reached some form of equilibrium or state of relative fair value," said Tim Burt, president and chief investment officer at Cardinal Capital Management Inc. in Winnipeg, Manitoba.

"Until you get one side taking leadership, the market just seems to be stuck."

The Canadian dollar finished higher against the greenback for a 10th straight session yesterday as it rebounded from early losses along with other riskier assets such as equities and crude oil.