By Jennifer Kwan

TORONTO (Reuters) - Toronto's main stock index rose
Monday as strong oil prices pushed up its energy sector and
investors showed optimism that the U.S. Federal Reserve will
signal steps to boost economic recovery.

The energy sector was up 0.6 percent as oil prices rose
above $81 a barrel, helped in part by expectations the U.S.
central bank may signal its readiness to print more money to
support the economy.Canadian Natural Resources
rose 1 percent to C$36.85.

"Canada is regarded, thanks to its big resource exposure,
as a play on global growth and people are expecting there will
be quantitative easing (by the Fed) or at least some indication
that's the direction they're heading in," said Gavin Graham,
global strategist at Excel Funds Management Inc.

The Toronto Stock Exchange's S&P/TSX composite index
finished the session up 63.59 points, or 0.54
percent, at 11,863.56, with nine of its 10 main sectors higher.
The small utilities sector sank 0.2 percent.

Financial shares were boosted by "feel good economic
stories" such as figures released Monday by McDonald's Corp
said Bob Gorman, chief portfolio
strategist at TD Waterhouse.

"McDonald's same store sales in July were up 7 percent.
Macdonald's tends to be looked upon as a bit of a bellwether
consumer stock," he said.

Gorman also said there was general optimism that Canadian
banks will report healthy results for their fiscal third
quarter.

"The Canadian financials, in particular the banks, are
quite strong today. I think apart from this general positive
sentiment in the market today you've got anticipation about Q3
earnings," he said. Bank results are due later this month.

Royal Bank of Canada climbed 0.9 percent to C$53.45
and, while Toronto-Dominion Bank rose 0.5 percent to
C$73.42.

Research In Motion was the top net gainer on the
TSX, rising 3.4 percent to C$56.80. The BlackBerry maker and
Saudi mobile firms were testing three servers to send
communications and data through Saudi Arabia before Canada to
address Riyadh's concerns over security, a Saudi official said
on Sunday.

Also supporting the resource-heavy index were copper
prices, which edged higher in part on expectations of healthy
demand from top consumer China. Teck Resources
rose 2 percent to C$36.30.

Elsewhere, Menu Foods Income Fund , a top net
gainer on the TSX, climbed 44 percent to C$4.72. Menu Foods
said Simmons Pet Food Inc is buying it for about C$239 million,
including the assumption of debt.

Aecon Group Inc Canada's biggest publicly traded
construction company, said it plans to buy the assets of
privately owned Cow Harbour Construction Ltd for about C$180
million, as it stakes a deeper claim on a revival in Western
Canada's oil sands industry. Aecon shares rose
3.2 percent to C$11.93.

The blue chip S&P/TSX 60 index closed 3.77 points,
or 0.55 percent, higher at 692.85.

($1=$1.03 Canadian)
(Reporting by Jennifer Kwan; editing by Peter Galloway)