(Reuters) -Canada's main stock index rose on Monday, led by gains for technology and metal mining shares, as the market shrugged off escalating tensions in the Middle East.

The S&P/TSX Composite Index ended up 111.79 points, or 0.4%, at 26,609.36, stopping just short of the record closing high it posted on June 12.

Wall Street also gained ground as prospects of the U.S. Federal Reserve cutting interest rates as early as July offset fears that Iran would disrupt crude transport in the Middle East.

"This rally is surprising to me given all the uncertainty with tariffs and the economy and all these wars that are going on," said Steve Palmer, president and chief investment officer at AlphaNorth Asset Management. "I'm a little more cautious right now given how much we've come in such a short time."

Canada and the United States have a chance to strike a new economic and defense relationship but nothing is assured, Canadian Prime Minister Mark Carney said.

The TSX has rebounded about 18% from its lowest closing level in April, helped by gains for the heavily weighted financial and materials sectors.

Materials, which includes fertilizer companies and metal mining shares, rose 0.9% on Monday as gold and copper prices climbed. Technology was up 1.5% and consumer discretionary ended 0.9% higher.

Energy was the only one of ten major sectors to end lower. It lost 3.5% as the price of oil pulled back from an earlier five-month high.

U.S. crude oil futures settled 7.2% lower at $68.51 a barrel.

(Reporting by Fergal Smith in Toronto and Sukriti Gupta and Twesha Dikshit in Bengaluru; Editing by Leroy Leo and Deepa Babington)

By Fergal Smith

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