By Fergal Smith
Aug 11 (Reuters) - Canada's main stock index rose on Thursday, closing at a the highest in two months as higher oil prices bolstered energy shares, but an uncertain economic environment threw doubt on whether it would be plain sailing ahead for the commodity-linked market.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 105.94 points, or 0.5%, at 19,991.88, adding to this week's rally and posting its highest closing level since June 10.
"We have had a pretty good week ... we have seen a lot of the commodities hang in," said Michael Sprung, president at Sprung Investment Management.
"I am not sure if this is going to be a long-term trend or not. If anything, I think the fears of inflation and possible recession are likely to resurface again."
Canada's inverted yield curve signals the Bank of Canada may raise interest rates to a level that triggers a recession, placing the central bank in a tough spot as it aims to tame high inflation and engineer a "soft landing" for the economy.
The energy sector climbed 3.9%, as crude oil futures CLc1 settled 2.6% higher at $94.34 a barrel after the International Energy Agency raised its oil demand growth forecast for this year.
Suncor Energy SU.TO added 3.3% as it considers spinning off its Petro-Canada gas business that accounts for 13% of Canada's retail fuel market.
Energy accounts for nearly 19% of the TSX's market capitalization.
Among other companies that stood out was Element Fleet Management Corp EFN.TO. Shares of the fleet management company jumped 10.3% after it beat earnings estimates, while manufacturing company Linamar Corp LNR.TO ended 10.6% higher.
Heavily-weighted financials rose 0.7% and consumer staples were up 1.7%.
(Reporting by Fergal Smith; Additional reporting by Johann M Cherian in Bengaluru; Editing by Shinjini Ganguli and David Gregorio)
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