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TSX ends up 0.4% at 26,609.36,

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Stops just short of June 12 record closing high

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Materials group gains 0.9% as metal prices rise

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Energy loses 3.5% as oil settles 7.2% lower

(Updates at market close)

By Fergal Smith

June 23 (Reuters) - Canada's main stock index rose on

Monday, led by gains for technology and metal mining shares, as

the market shrugged off escalating tensions in the Middle East.

The S&P/TSX Composite Index ended up 111.79

points, or 0.4%, at 26,609.36, stopping just short of the record

closing high it posted on June 12.

Wall Street also gained ground as prospects of the U.S. Federal

Reserve cutting interest rates as early as July offset fears

that Iran would disrupt crude transport in the Middle East.

"This rally is surprising to me given all the uncertainty with

tariffs and the economy and all these wars that are going on,"

said Steve Palmer, president and chief investment officer at

AlphaNorth Asset Management. "I'm a little more cautious right

now given how much we've come in such a short time."

Canada and the United States have a chance to strike a new

economic and defense relationship but nothing is assured,

Canadian Prime Minister Mark Carney said.

The TSX has rebounded about 18% from its lowest closing

level in April, helped by gains for the heavily weighted

financial and materials sectors.

Materials, which includes fertilizer companies and metal mining

shares, rose 0.9% on Monday as gold and copper prices climbed.

Technology was up 1.5% and consumer discretionary ended 0.9%

higher.

Energy was the only one of ten major sectors to end lower. It

lost 3.5% as the price of oil pulled back from an earlier

five-month high.

U.S. crude oil futures settled 7.2% lower at $68.51 a

barrel.