* TSX ends up 0.5% at 19,672.25
* Energy rises 1.2%; oil settles nearly 3% higher
* Materials sector advances 1.9%
* Canadian factory activity slows in May
June 1 (Reuters) - Canada's main stock index rallied on Thursday, clawing back some recent declines, as higher commodity prices boosted resource shares and progress toward passing a U.S. debt ceiling bill lifted investor sentiment.
The Toronto Stock Exchange's S&P/TSX composite index ended up 100.01 points, or 0.5%, at 19,672.25, recovering from a two-month low the day before.
"We are seeing a bit of a rally in North American markets," said Angelo Kourkafas, an investment strategist at Edward Jones. "One step in the right direction again when it comes to the (U.S.) debt ceiling."
U.S. stock indexes rose as investors cheered a vote in Congress to suspend the U.S. debt ceiling, while signs of slowing wage pressure on inflation added to growing optimism the Federal Reserve will skip raising interest rates in two weeks.
Meanwhile, domestic data showed manufacturing activity slowed in May as high inflation and inventory cutting held back customer demand.
The data is "a small sign that things are slowing and central banks don't need to be overly aggressive even though there is some uncertainty as what the Bank of Canada will do next week," Kourkafas said.
Money markets see a roughly 30% chance the Bank of Canada will raise interest rates next week for the first time since January.
The Toronto market's energy sector rose 1.2% as U.S. crude oil futures settled nearly 3% higher at $70.10 a barrel.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1.9% as gold and copper prices climbed.
(Reporting by Fergal Smith in Toronto and Johann M Cherian in Bengaluru Editing by Vinay Dwivedi and Alistair Bell)
