TSX ends higher as oil rallies, Gildan Activewear jumps

* TSX ends up 0.1% at 21,860.58

* Energy adds 0.5%; oil settles 0.9% higher

* Gildan Activewear shares jump 10.8%

* Canada's annual inflation rate cools to 2.8%

March 19 (Reuters) - Canada's main stock index rose on Tuesday, helped by higher oil prices and a sharp increase in the shares of Gildan Activewear, but the index's gains were kept in check by uncertainty ahead of an interest rate decision by the U.S. Federal Reserve.

The Toronto Stock Exchange's S&P/TSX composite index ended up 23.4 points, or 0.1%, at 21,860.58, moving closer to a near two-year high it notched last Wednesday at 21,970.11.

"Energy is strong. Oil prices are grinding higher above 80 dollars and we're heading toward the summer driving season in the United States," said Brian Madden, chief investment officer at First Avenue Investment Counsel Inc.

The energy sector added 0.5% as the price of oil settled 0.9% higher at $83.47 a barrel, with traders assessing how Ukraine's recent attacks on Russian refineries would affect global petroleum supplies.

The consumer discretionary sector climbed 1.6%, led by a gain of 10.8% for the shares of Gildan Activewear after the company said its board has decided to put the clothing maker up for sale following a review by a special committee.

High-dividend paying sectors, such as consumer staples and real estate, also notched gains as a surprise cooling in Canadian inflation to an annual rate of 2.8% in February bolstered expectations the Bank of Canada would begin cutting interest rates in the coming months.

"A caveat to the strength that we're seeing, it's in very light trading volume," Madden said. "Everybody is sitting on pins and needles waiting for the Federal Reserve meeting tomorrow."

The Fed's two-day policy meeting is due to conclude on Wednesday. Investors are concerned that the U.S. central bank may reveal new economic projections that signal fewer interest rate cuts and a later start to the policy easing cycle. (Reporting by Fergal Smith in Toronto and Shubham Batra in Bengaluru; Editing by Vijay Kishore and Sandra Maler)