The Toronto Stock Exchange's S&P/TSX composite index ended up 301.55 points, or 1.45%, at 21,162.65, its highest closing level since Nov. 25. It follows a 1.1% gain on Monday.
"People referred to this period as a Santa Claus Rally and I see some of that taking place now as we hit the end of the year," said Irwin Michael, a portfolio manager at ABC Funds. "Investors who were heavy in cash, or who missed the market might feel compelled to invest money."
Wall Street's main indexes also rallied strongly, helped by some positive news on the Omicron variant of COVID-19, which had helped send investors to the exits last week.
British drugmaker GlaxoSmithKline Plc said its antibody-based COVID-19 therapy is effective against all mutations of the new variant.
The energy sector advanced 3.1% as oil prices settled 3.7% higher at $72.05 a barrel.
Consumer discretionary shares gained 2.2%, while the technology sector ended 2.8% higher.
Among the biggest gainers was network management services provider Real Matters Inc, which rose nearly 16%.
Dye & Durham Ltd climbed 10.7%, adding to strong gains the day before, as multiple brokerages raised the price target on the IT service provider's stock.
Economic data showed that Canada posted a trade surplus of C$2.1 billion in October, its largest in almost a decade.
The Bank of Canada is due to make an interest rate decision on Wednesday.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Sandra Maler)
By Fergal Smith
