UBS Securities Canada Inc. is calling for the S&P/TSX composite index to enjoy double-digit gains in 2008.

In a report released today, UBS says it is looking for the TSX to post a double-digit gain from current levels, and it has a 12-month target of 15,000 for the index. “The earnings outlook is relatively balanced, with both the resource and non-resource sectors expected to post double-digit earnings gains, with the TSX now trading at just over 14x those estimates,” it says.

“The key themes will be the juxtaposition of a still solid domestic economy without major imbalances and further support coming in the form of reduced income and consumption taxes, with that of reduced export volumes because of the weaker US economy and strong Canadian dollar,” UBS notes. “This should help support domestic financial and consumer stocks relative to those dependent on US and global growth.”

“The developments that could materially affect the TSX’s prospects are whether the US economy is able to recover by mid-2008 and credit markets can return to more normal conditions,” the report suggests. Another factor will be China’s ability to slow the recent surge in credit growth, which will be key to global growth and commodity prices.

UBS is slightly underweighting resources (specifically energy and materials), with diversity in agriculture and gold to avoid the direct effects of the housing-induced slowdown. It is overweight financials, consumer discretionary and telecoms. And, it’s neutral on technology, consumer staples and industrials. “Our preferred eight stocks are CN Rail, Goldcorp, Onex, Potash, Research in Motion, Rogers, Shoppers and Suncor,” it says.