After three consecutive sessions of losses, the benchmark index of the Toronto Stock Exchange finished with strong gains on Monday, led by a surge in financial sector stocks.

The S&P/TSX composite index gained 126.33 points, or 1.1%, to close at 11,338.72.

The financials group gained 2% on Monday, helped by evidence that merger and acquisition activity was beginning to rebound.

Shares of Bank of Montreal jumped $1.26, or 2.4%, to close at $54.31.

Toronto-Dominion Bank rose 2.1% to $68.88 and Bank of Nova Scotia advanced 1.6% to $48.45.

Also higher was Manulife Financial Corp., up 2.9% to $22.35, and Sun Life Financial Inc., up 3.1% to $33.02.

Energy stocks added 1.2%, bolstered by rising oil prices. Crude oil for November delivery finished up 82 cents, or 1.2%, at US$66.84 a barrel on the New York Mercantile Exchange.

Shares of Talisman Energy Inc. gained 2.5% to $18.66, and Petrobank Energy and Resources Ltd. added 2.2% to $42.87.

Also higher was EnCana Corp., up 1.3% to $61.57, and Niko Resources Ltd., up 2.5% to $83.37.

The sub-gold index slid 0.4% on Monday, despite a small boost in gold futures. Gold for December delivery, rose US$2.50, or 0.25%, to finish at US$994.10 an ounce on the Comex division of the New York Mercantile Exchange.

But other resource stocks advanced on Monday, helping the materials group gain 0.8%.

Shares of Inmet Mining Corp surged $3.13, or 5.6%, to $58.68.

Teck Resources Ltd. jumped 3.7% to $29.47 and Agrium Inc. rose 2.9% to finish at $54.11.

Lower for the day was Osisko Mining Corp., down 4.3% to $7.97, and Gammon Gold Inc., off 2.2% to end at $8.38.

Also sharply lower on Monday was mobile communications giant Research in Motion Ltd., which saw its stock tumble $2.85, or 3.8%, to $72.19.

Despite the drop, the information technology group on the TSX finished the day up 0.2%, as shares of Celestica Inc. jumped 5.4% to $9.91.

The junior S&P/TSX Venture index gained 10.09 points, or 0.8%, to close at 1,269.73.

The Canadian dollar climbed a third of a cent to close at US91.95¢.

Equities in New York were also bolstered by the evidence of rising M&A activity on Monday. The main U.S. stock market indices finished higher for the first time in four sessions.

The Dow Jones industrial average rose 124.17 points, or 1.3%, to close at 9,789.36.

The S&P 500 index jumped 18.6 points, or 1.8%, to finish at 1,062.98.

The Nasdaq composite index climbed 39.82 points, or 1.9%, to end at 2,130.74.

On the New York Stock Exchange, shares of Affiliated Computer Services Inc. surged US$6.61, or 14%, to end at US$53.86 after Xerox Corp. agreed to buy the outsourcing and information-services company for $6.4 billion.

IE