The TSX wavered between positive and negative territory early in the session on Tuesday, but ended the day 86.41 points higher to 11,629.88 as commodity prices climbed and investors took in an interest rate hike and economic outlook from the Bank of Canada.

The metals and mining sector was one of the main risers, up 2.5%, while the energy sector moved 1.1% higher as crude for August delivery climbed 90 cents to $77.44 a barrel.

Gold for August delivery also moved higher, up $9.80 to $1,191.70 an ounce, and the TSX Venture eked out a 0.90 point gain to 1,363.09.

In economic news, the Bank of Canada announced that it is raising its target for the overnight rate by 0.25 percentage points to 0.75%. The Bank said it expects the economic recovery in Canada to be more gradual than it had projected in April, with growth of 3.5% in 2010, 2.9% in 2011, and 2.2% in 2012, reflecting “a slightly weaker profile for global economic growth and more modest consumption growth in Canada.”

On the TSX, shares of Air Canada (TSX: T-AC.B) climbed 24 cents to $2.15 after the airline released its second quarter preliminary results and updated full year 2010 guidance. Air Canada estimates that its system capacity in the second quarter was 5.3% higher than the second quarter of 2009.

For the full year 2010, the airline says it expects its system capacity to increase by between 6% and 7.5% over 2009 in contrast to the previously projected increase of 4% to 6%. Air Canada also estimates that its EBITDAR for Q2 was in the range of $320 million to $340 million, compared to $135 million for the second quarter of 2009.