(Updates with market close numbers, analysts' comments

throughout)

*

S&P/TSX composite index closed up 0.6% to 28,339.88 points

*

BMO and Scotiabank beat third-quarter earnings estimates

*

Index also aided by gold prices, which rose to two-week

high

By Nikhil Sharma and Promit Mukherjee

Aug 26 (Reuters) - Canada's main stock index closed up

on Tuesday as strong bank earnings and higher gold prices helped

boost shares, even as oil slid and concerns deepened about the

U.S. Federal Reserve's independence.

The Toronto Stock Exchange's S&P/TSX composite index

was up 0.6% to 28,339.88 points at the close, mostly

led by strong earnings from two of the country's five biggest

lenders.

Bank of Montreal ( BNKD ) and Bank of Nova Scotia,

Canada's third- and fourth-largest banks kicked off big bank

earnings for the quarter that ended on July 31, with profits and

commentary cheered by markets and analysts.

BMO and Scotiabank beat third-quarter earnings estimates and

reported smaller-than-expected loan loss provisions. BMO and

Scotiabank shares were up nearly 5% and 7% respectively, at

market close, pushing the financial index, with 32% weight in

the composite index, up 1.4% on close.

"With all the talk about tariffs and slowing growth in

Canada, it's actually quite positive to see the banks reporting

earnings that were better than expected," said Elvis Picardo, a

portfolio manager at Luft Financial, iA Private Wealth.

"It just proves that the Canadian economy is still

resilient," he said, adding that these lenders were primarily

responsible for lifting the TSX.

The index also benefited from gold prices, which rose to a

more than two-week high as investors took refuge in safe-haven

yellow metal after fears that U.S. President Donald Trump would

infringe on the independence of the Federal Reserve.

Trump fired Fed Governor Lisa Cook over alleged

improprieties in obtaining mortgage loans.

Spot gold was trading at 3,390.52 per ounce, up 0.71% at

4:13 p.m. ET (2013 GMT), which lifted the

mining-companies-tracker materials index, with almost

12.5% weight on the TSX, up 1.41% at market close.

Martin Pelletier, senior portfolio manager at TriVest Wealth

Counsel, said the course of the TSX this week would be decided

by earnings reports in Canada and the U.S., even as U.S. trade

policy continues to create uncertainty.

Top Canadian banks, including the biggest lender, Royal Bank of

Canada ( RY ) and mega U.S. chipmaker Nvidia ( NVDA ) will

release earnings this week.