CANADA STOCKS-TSX posts one-week high, led by financials and utilities

Updates at market close

By Fergal Smith

Jan 16 (Reuters) - Canada's main stock index rose to a one-week high on Thursday, adding to the previous day's solid gains, as investors cheered U.S. bank earnings and a drop in long-term borrowing costs.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 56.90 points, or 0.2%, at 24,846.20, its highest closing level since Jan. 9. On Wednesday, the index posted its biggest gain since November.

"You had good bank earnings which continued today out of the U.S. but you also had interest sensitive stocks rallying on this notion that (U.S.) inflation numbers came in maybe slightly better than expected, and that rally has continued today," said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.

The financials sector, which accounts for 31% of the TSX's weighting, added 0.7% and technology was up 0.9%.

Utilities climbed 2%. The sector contains many high-dividend stocks that become more attractive when bond yields fall.

Canada's 10-year yield fell for a second straight day, declining 7.7 basis points to 3.342%, as investors braced for expected U.S. trade tariffs and the Bank of Canada said it would end its quantitative tightening program in the coming months.

The central bank is expected to cut interest rates by 25 basis points to 3.00% when it meets later this month, according to a Reuters poll of economists.

A sharp decline in energy limited the TSX's gains. The sector was down 1.8% as the price of oil settled 1.7% lower at $78.68 a barrel on expectations that Yemen's Houthi militia will halt attacks on ships in the Red Sea.

(Reporting by Fergal Smith in Toronto and Ragini Mathur in Bengaluru; Editing by Krishna Chandra Eluri, Sahal Muhammed and David Gregorio)

((fergal.smith@thomsonreuters.com; +1 647 480 7446))