By John Tilak
TORONTO (Reuters) - Canada's main stock index jumped 1 percent to its highest in more than 1-1/2 months on Tuesday, fueled by gains in most major sectors and optimism following positive economic data from Europe.
British inflation fell twice as fast as expected last month, giving incoming Bank of England governor Mark Carney more leeway for stimulus. A report said Germany is on track for a solid recovery due to a pick-up in demand for its products from abroad.
Investors also awaited minutes out Wednesday from a U.S. Federal Reserve meeting to look for clues about whether the central bank will continue its ongoing stimulus plans.
The market was supported by strength in resource groups, reflecting gains in the prices of some commodities on Monday, when the benchmark Canadian index was closed.
The Toronto market, up for the third straight session, has climbed 2.4 percent on the year to play catch-up on the S&P 500 (.SPX), which has recorded much steeper gains.
Investors are starting to recognize the value in the TSX even though "it has been the ugly duckling and the red-headed stepchild all year," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
"We've had a number of names that are blowing higher," he added. "You can make money in Canada if you avoid the commodities."
The materials and energy sectors have been hit this year due to the weakness in commodity prices.
The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) was up 126.50 points, or 1 percent, at 12,739.55 On Tuesday. The index earlier reached 12,757.04, its highest point since March 28.
Eight of the 10 main sectors on the index were higher.
The materials sector, which includes mining stocks, jumped more than 2 percent, helped by a 3.5 percent rise in shares of gold producers.
Miner Barrick Gold Corp (Toronto:ABX.TO - News) advanced 4.7 percent to C$19.96.
Energy stocks climbed 1.4 percent.
Financials, the index's most heavily weighted sector, added almost 1 percent.
Royal Bank of Canada (Toronto:RY.TO - News) was up 1.2 percent, at C$62.92 and played the biggest role of any single stock in leading the market higher.
(Editing by Andrew Hay)