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TSX ends up 0.3% at 22,751.68

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Energy sector climbs 1.8%

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Stelco ( STZHF ) jumps nearly 74% on acquisition deal

(Updates at market close)

By Fergal Smith

July 15 (Reuters) - Canada's main stock index extended

its record-setting rally on Monday, led by gains for energy

shares and helped by a jump in steelmaker Stelco Holdings' ( STZHF ) stock

after the company said it reached a deal to be acquired.

The S&P/TSX composite index ended up 78.16 points,

or 0.3%, at 22,751.68, posting its fourth straight day of gains.

On Thursday, it climbed above the record closing high it posted

in May.

"What we're seeing is a continuation of that rally that

kicked off on Thursday with a bit of a rotation towards the

value and cyclical names," said Greg Taylor, a portfolio manager

at Purpose Investments.

"It looks like a pretty good move, and we're seeing the

right things with the commodities leading and real assets

starting to take over."

The Toronto market has a heavy weighting in stocks of

companies with physical assets such as metals and oil. Combined,

the materials and energy sectors account for 32% of the index's

weighting.

The energy sector climbed 1.8% as speculation that the

Federal Reserve would soon cut interest rates pressured the U.S.

dollar in recent days and raised prospects of increased demand

for oil.

The Bank of Canada has already begun cutting rates. Canadian

businesses expect interest rates to come down by up to 100 basis

points over the next year but their investment spending remains

below average owing to a weak demand outlook, the central bank

said in its second-quarter survey.

The industrials group added 0.6%, financials were up 0.5%

and real estate ended 0.9% higher.

Stelco Holdings' ( STZHF ) shares soared nearly 74% after

U.S. steelmaker Cleveland-Cliffs ( CLF ) said reached an

agreement to buy the company for C$3.85 billion ($2.8 billion).

Among the biggest decliners was Canada Goose Holdings Inc.

Its shares sank 9.4% to hit the lowest since May 15.