Canada's main stock index reversed early losses to edge higher Thursday as the materials and energy sectors strengthened ahead of the afternoon release of the federal budget.

The S&P/TSX composite index closed up 46.29 points to 21,834.89.

The day started poorly with the Toronto market losing as much as about 150 points. It followed Wednesday's selloff prompted by the release of minutes from the Federal Reserve's last meeting in which members suggested they would be more aggressive in tackling inflation.

But things turned around in the early afternoon to close higher on the day.

Michael Currie, vice-president and investment adviser at TD Wealth, says Thursday's movements are hard to explain except they represent a rebound after two or three "lousy days in a row."

"Bad start to the month and I guess when things opened down this morning, enough people saw it was maybe down enough and here's a chance to get in," he said in an interview.

The rally was pretty broadly based, led by energy and materials, which climbed 1.9 and 1.8 per cent, respectively.

Energy increased despite crude oil prices dipping slightly on the day. Shares of Advantage Oil and Gas Ltd. were up 5.3 per cent while Baytex Energy Corp. moved 3.6 per cent higher.

The May crude contract was down 20 cents at US$96.03 per barrel and the May natural gas contract was up 33 cents at US$6.36 per mmBTU. 

The Canadian dollar traded for 79.47 cents US compared with 79.94 cents US on Wednesday. 

Materials moved higher on a rise in gold prices with Ero Copper Corp. up 7.3 per cent and OceanaGold Corp. 3.9 per cent higher.

"This is its first gain in three sessions (so) probably just a little bargain-hunting there for people," Currie said.

He noted that the Fed becoming more hawkish is negative for gold, while bad news coming out of Ukraine is good for the precious metal.

"So there's kind of a bit of a tug of war there, but the little bounce up in gold has helped materials." 

Earlier, Russian Foreign Minister Sergey Lavrov accused Ukraine of derailing talks with Moscow by changing its negotiating stance. 

Telecommunications and consumer staples were up by more than one percentage point on the day.

Health care was the biggest laggard, losing 3.7 per cent as cannabis producer Tilray Inc. slumped 10.6 per cent. The heavyweight financials sector was down 1.2 per cent as all Canadian banks were lower with Toronto-Dominion leading with a drop of 2.7 per cent.

Technology continued its losing ways, with Lightspeed Commerce Inc. decreasing 3.7 per cent and Shopify Inc. down 1.4 per cent.

Currie said he doesn't believe the federal budget, which was released after markets closed, had much of an impact on trading since the general themes of the government's fiscal plans were already known.

"It seems like they telegraphed a lot of what's going to happen. Seems to be a focus on housing, so unless there's a surprise in there, I think it's probably cooked into the market a little bit here already."

In New York, the Dow Jones industrial average gained 87.06 points at 34,583.57 with a swing of more than 500 points on the day. The S&P 500 index was up 19.06 points at 4,500.21, while the Nasdaq composite was up 8.48 points at 13,897.30.