April 10 (Reuters) - Canada's main stock index inched up in volatile trading on Monday as energy stocks rallied, while investor concerns about further rate hikes by the U.S. Federal Reserve kept a lid on gains.
At 10:08 a.m. ET (14:08 GMT), the Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) was up 34.36 points, or 0.17%, at 20,231.05.
The energy sector (.SPTTEN) surged 1.7% after the largest U.S. oil producer Exxon Mobil Corp (XOM.N) reportedly held preliminary talks with Pioneer Natural Resources Co (PXD.N) about a possible acquisition of the shale oil producer. However, prices of oil were muted.
"Energy stocks are getting a lift from some of this talk about mergers and acquisitions in the U.S.," said Allan Small, senior investment advisor at Allan Small Financial Group.
"But, the overall sentiment is definitely one of caution regarding worries about a slowdown in the global economy."
Rate sensitive sectors such as real estate (.GSPTTRE) and tech (.SPTTTK) shed 0.8% and 1.0%, respectively.
The materials sector (.GSPTTMT) slipped 0.3% tracking weakness in gold and silver prices.
Among stocks, Teck Resources Ltd (TECKb.TO) dropped 3% after the miner doubled down on its push to reject an unsolicited bid from Glencore Plc (GLEN.L), and recommended that shareholders vote for its own restructuring plan instead.
Kelt Exploration Ltd (KEL.TO) surged 5.5% to a near three-month high after brokerage Scotiabank upgraded the oil explorer to "sector outperform" from "sector perform".
Following the recent selloff in risky-assets, the TSX had entered into a period of recovery over the past three weeks, on hopes of the U.S. central bank easing on monetary tightening.
However, market sentiment took a hit following signs of a resilient U.S. labor market late last week on fresh concerns of the Fed staying hawkish.
Later in the week, investors await the Bank of Canada's decision on further monetary tightening. Market participants and analysts largely expect the central bank to retain the benchmark rate at 4.5%.
