* TSX up 0.4%

* Energy shares lead gains

* Fairfax Financial denies Muddy Waters' allegations, shares up

Feb 12 (Reuters) - Canada's main stock index rose on Monday, led by gains in consumer discretionary and energy, as broader market sentiment ticked up ahead of crucial U.S. inflation data this week.

At 10:33 a.m. ET (1533 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 85.97 points, or 0.41%, at 21,095.57.

"The market sentiment is really good. The Federal Reserve is there to backstop the economy should things get really bad. A win-win mentality is partially fuelling this upward trend," said Allan Small, senior investment adviser of Allan Small Financial Group with iA Private Wealth.

A January reading of the Consumer Price Index (CPI) numbers in the U.S. is due on Tuesday, which could provide more clues on the timing for interest rate cuts by the Fed, and potentially set the tone for other central banks.

"If the CPI shows inflation is not moving higher and we're still seeing GDP and jobs growth, it says inflation can come down and growth can still happen. If the number is higher than anticipated, it could delay rate cuts even further," Small added.

Revised CPI numbers for 2023, released on Friday, showed lower inflation in the U.S. than estimated earlier, reviving optimism around sizable rate cuts from the U.S. central bank in the year.

Back home, consumer discretionary stocks and energy shares gained 1.0% and 1.1%, respectively.

Luxury parka maker Canada Goose climbed 6%, becoming the top gainer among the consumer discretionary stocks.

Industrials and communications services slipped 0.2% and 0.3%, respectively, lagging other sectors.

Fairfax Financial gained 3.7%, after the Canadian insurer denied allegations by Muddy Waters Research that it was manipulating asset values, saying the short-seller's report was "false and misleading". (Reporting by Purvi Agarwal in Bengaluru; Editing by Shweta Agarwal and Shilpi Majumdar)