TSX gains on Potash Corp takeover speculation

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(Reuters)

TORONTO (Reuters) - The TSX finished higher on Monday, pushed up by speculation that Potash Corp of Saskatchewan could be taken over, and by firmer commodity prices.

Shares of Potash rose more than 5 percent, leading all advancers, after a Bank of America Merrill Lynch research report touted the idea that mining giant BHP Billiton could afford to make an all-cash bid for the world's largest fertilizer maker.

Potash Corp ended up 5.7 percent at C$106.84.

Fellow fertilizer company Agrium gained 6.4 percent to C$58.90 after it agreed to sell part of a nitrogen fertilizer facility to Terra Industries .

A drop in gold-mining issues partly offset the gains made by the fertilizer companies even though the price of gold pushed above $1,060 an ounce. Goldcorp fell 0.5 percent to C$43.80.

Oil hit a one-year high above $79 a barrel, lifting some of the bigger names in the oil and gas group, including a 1.15 percent gain for Nexen Inc to C$26.38 and a 0.45 percent gain in Suncor Energy to C$40.16.

The S&P/TSX composite index closed up 33.63 points, or 0.29 percent, at 11,538.39.

The index's gains came ahead of a Bank of Canada policy statement on Tuesday in which the bank will likely hold the line on interest rates and perhaps tinker with its economic forecasts as it waits for firmer evidence that economic recovery is for real.

"We have a lot of cross currents," said Sal Masionis, stockbroker at Brant Securities, pointing to examples such as a relatively high unemployment rate, while the housing sector has shown signs of strength.

($1=$1.04 Canadian)

(Reporting by Ka Yan Ng; editing by Peter Galloway)