The Toronto Stock Exchange sing is seen in Toronto
The Toronto Stock Exchange sign is seen in Toronto, Ontario, Canada July 6, 2017. Reuters

Canada's main stock index reversed early losses on Thursday, as strong gains in energy and mining firms countered interest rate jitters and market uncertainty caused by the resignation of Liz Truss as UK's prime minister.

At 10:36 a.m. ET (14:36 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 130.27 points, or 0.7%, at 18,804.67.

Most of the sectoral indexes were trading higher, with energy in the lead as crude prices rose on tighter supplies and news of China considering reducing the duration of quarantine for inbound visitors. [O/R]

The materials sector, which includes miners, rose 1.9% with an uptick in prices of gold and some other precious metals.

Industrials was the only outlier, falling 0.7%.

Britain's Truss said on Thursday that she would step down as prime minister, adding to the political and financial turmoil gripping UK in recent weeks.

Wall Street's main indexes opened lower, but also reversed losses. [.N]

Canadian home prices tumbled in September from last month, posting its largest monthly decline since 1999, as per Teranet-National Bank National Composite House Price data.

Even as recession worries intensify in Canada, expectations that the central bank would go ahead with another super-sized interest rate hike next week have increased after data showed underlying inflation was stubbornly persistent despite aggressive tightening.

Worrying inflation data from other parts of the world has also doused hopes that the Federal Reserve and other central banks could ease their pace of tightening anytime soon.

"Investors are trying to get a gauge like at what point the Federal Reserve is going to pause this rate hiking cycle," said Brandon Michael, senior analyst at ABC Funds in Toronto.

"The market is very sensitive to this and an eventual peaking of short-term rates should provide a positive catalyst towards higher stock prices."

Traders are now split evenly between a 75-bps and 50-bps rate hike when the Bank of Canada meets next week.

In company news, German motor giant Mercedes signed a 1.5-bln euro deal with Canadian-German Rock Tech Lithium Inc to receive on average 10,000 tons of battery-grade lithium hydroxide per year.

Canada's Rogers Communications Inc said its wireline services have been restored after a brief disruption it blamed on a fibre cut caused by a third party. Shares of the company were up 0.3%.