By John Tilak
TORONTO (Reuters) - Canada's main stock index rose to its highest in more than two years on Friday after Federal Reserve Vice Chair Janet Yellen, who is widely expected to take over as head of the U.S. central bank, expressed strong support for the Fed's stimulus program.
The Toronto stock market's benchmark index advanced for a third straight session and recorded a second consecutive weekly gain.
Economic reforms announced by China, which included steps to free up markets, also provided support.
Yellen defended the Fed's plans to stimulate growth and said on Thursday she would implement the central bank's ultra-easy monetary policy until officials are confident the economic recovery is robust and job creation sustainable.
"The spotlight is clearly on Janet Yellen," said Adrian Mastracci, portfolio manager at KCM Wealth Management, who expects the Canadian market to benefit in the near term from the continuation of the Fed's accommodative monetary policy.
"As long as the Fed is shelling out money, we're going higher," he added. "But someday the buying has to stop."
The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed up 51.18 points, or 0.38 percent, at 13,482.56, after reaching 13,490.19, its highest level since July 2011.
The strong advances in the Canadian market over the last one month are unsustainable, said John Ing, president of Maison Placements Canada. But lagging natural resource stocks offer value, he added. "My expectation is that commodities will pick up."
Seven of the 10 main sectors on the index were higher on Friday.
Financials, the index's most heavily weighted sector, rose 0.4 percent. Bank of Nova Scotia
Energy shares jumped 1 percent. Canadian Natural Resources Ltd
Canadian dairy company Saputo Inc
(Editing by G Crosse and Peter Galloway)