(Updates at market close)

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TSX ends up 0.2% at 25,635.73

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Materials group climbs 2.7%

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Energy adds 0.5%; oil settles 2.7% higher

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Scotiabank falls 3.4% after earnings miss

By Fergal Smith

Dec 3 (Reuters) - Canada's main stock index rose on

Tuesday, with gains for resource shares offsetting disappointing

results from Bank of Nova Scotia ( BNS ) as positive momentum

since the outcome of the U.S. presidential election in November

continued.

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

ended up 45.40 points, or 0.2%, at 25,635.73, stopping

just short of the record closing high it posted on Friday.

In November, the TSX added 6.2%, its biggest monthly gain in

one year.

"The post-election relief rally continues," said Matt Skipp,

president of SW8 Asset Management. "Optimism about a more

business friendly environment in the United States is driving

markets ever higher."

Canada sends about 75% of its exports to the United States,

including oil, which settled 2.7% higher at $69.94 a

barrel as Israel threatened to attack the Lebanese state if its

truce with Hezbollah collapses.

Energy added 0.5% and the materials group, which includes

fertilizer companies and metal mining shares, was up 2.7%.

Copper prices climbed 1.8% and gold edged higher.

Bank of Nova Scotia ( BNS ) shares fell 3.4% as the bank

reported fourth-quarter earnings below analysts' expectations,

warning about modest economic growth in key international

markets and drawing investors' attention to credit woes as

consumers struggle to pay back high-interest loans.

"Interest rates are too high in Canada and they've got to

come down. Everybody is loaded with debt and it hurts," Skipp

said.

The Bank of Canada has lowered its benchmark interest rate by

one and a quarter percentage points since June to 3.75% but

borrowing costs are still above the 2.75% rate the central bank

estimates for the neutral setting - the level that neither

restricts nor stimulates the economy.

The heavily weighted financials sector was down 0.5%, while

industrials ended 0.4% lower as railroad shares fell.