Canada's main stock index closed higher on Thursday, led by heavyweight financial sector shares a day after the federal budget held off from raising taxes on investors.

The Toronto Stock Exchange's S&P/TSX composite index rose 85.15 points, or 0.55 per cent, to 15,433.61. On Wednesday, it touched a three-month low intraday at 15,241.55.

"It's a rebound rally from the concerns that I think a lot of people had that the capital gains tax was going to get increased and taxes on dividends were going to get increased," said Rick Hutcheon, president and chief operating officer at RKH Investments.

The Liberal government unveiled a stay-the-course budget after the stock market closed on Wednesday.

Businesses had feared higher capital gains taxes would harm their competitiveness just as U.S. rivals benefit from a break in taxes and regulation under U.S. President Donald Trump.

The U.S. House of Representatives cancelled Thursday's vote on a health care bill. Losing the vote would bruise investors' confidence in Trump's ability to deliver on his promises of tax cuts and infrastructure spending.

The financials group, which contains many dividend-paying stocks, rose one per cent as a recent decline in bond yields lost some momentum. Higher bond yields would reduce the value of insurance companies' liabilities and increase net interest margins of banks.

The energy group rose 0.4 per cent even as oil prices struggled to recover from four-month lows because of investor concerns that OPEC-led supply cuts were not yet reducing record U.S. crude inventories.

U.S. crude prices settled 34 cents US lower at US$47.70 a barrel.

The U.S. State Department will approve on Friday the permit needed to proceed with construction of TransCanada Corp's Keystone XL oil pipeline, according to two government sources familiar with the process.

TransCanada's shares rose 0.4 per cent to $61.76.

Enbridge Inc fell one per cent to $54.54. On Wednesday, the company said it would cut about 1,000 positions after buying Spectra Energy Corp of Houston.

Nine of the index's 10 main groups rose, with industrials gaining one per cent as railroad stocks climbed, and consumer staples advancing 0.6 per cent.

The materials group, which includes precious and base metals miners and fertilizer companies, dipped 0.3 per cent.

Silver Wheaton Corp fell 3.7 per cent to $27.51, while Barrick Gold Corp was down 0.5 per cent at $25.84.

Gold futures fell 0.2 per cent to US$1,246.3 an ounce.   

U.S. MARKETS

Wall Street declined on Thursday after lawmakers delayed a vote on a healthcare bill seen as President Donald Trump's first policy test.

Failure to pass the American Health Care Act would cast doubt on Trump's ability to deliver other parts of his agenda that need the cooperation of the Republican-controlled Congress, including ambitious plans to overhaul the tax code and invest in infrastructure.

The U.S. House of Representatives had been scheduled to vote on the bill on Thursday, but leaders put off the vote after failing to find enough support among Republicans to pass it.

The S&P 500 has surged 10 per cent since the election, mainly due to optimism about Trump's campaign promises to enact legislation seen as pro-business.

Not passing the healthcare bill would be seen by many investors as pushing back the agenda of corporate tax cuts.

"If this thing gets materially delayed or if we get a 'no' vote, we're going to see a horrific market reaction," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa. "But if they vote in the morning and it passes, we'll have a hell of a rally."

Jitters about the health care bill on Tuesday led investors to sell stocks in what was the S&P 500's worst day since before Trump's election. Wall Street's reaction to the vote's delay, late in Thursday's session, was relatively mild.

The Dow Jones Industrial Average ended down 0.02 per cent at 20,656.58 points, while the S&P 500 lost 0.11 per cent to 2,345.96.

The Nasdaq Composite slipped 0.07 per cent to 5,817.69.

Seven of the 11 major S&P indexes declined, with the energy index down 0.36 per cent.

Google-parent Alphabet fell 1.19 per cent as more firms pull YouTube ads on fears they may appear alongside offensive videos. The stock was the biggest drag on the S&P 500 and the Nasdaq.

Five Below surged 10.80 per cent after the retailer's quarterly earnings beat estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.86-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored advancers.

The S&P 500 posted 14 new 52-week highs and one new low; the Nasdaq Composite recorded 50 new highs and 48 new lows.

About 6.4 billion shares changed hands in U.S. exchanges, below the 7.1 billion daily average over the last 20 sessions.