Toronto stocks got a lift Monday from a Great West Lifeco Inc.’s surprise move to acquire Canada Life Financial Corp. The deal helped the Toronto financial sector rise more than 2%, which pulled the S&P/TSX index 76.98 points higher to 6,564.11.

U.S. markets were closed for Presidents’ Day.

Great-West Lifeco is offering $44.50 in cash and stock for each Canada Life share in a deal worth $7.3 billion. The transaction creates the biggest insurer in Canada, and trumps the offer that Manulife Financial made in December by $1.1 billion.

Great-West shares fell $1.93 to $35.59, but Canada Life rose $2.54 to a 52-week high of $42.63. Manulife shares advanced $2.01 to $37.80.

Shares in the he banks rose on renewed merger fever. Royal Bank gained $1.05 to $57.05

The TSX information technology sector rose as Nortel Networks added 16¢ to $3.69.

Other active Toronto stocks include Sun Life Financial, up $1.25 to 27.70; Telus, ahead 86¢ to $17.76; and ATI Technologies, up 32¢ at $6.75.

Toronto volume was a lighter than usual: 103.9 million shares worth $1.37 billion. Advances beat declines 547 to 457 with 218 unchanged.

The junior TSX Venture Exchange dropped 7.55 points at 1,087.94.

The Canadian dollar gained 0.08¢ to US65.74¢.

Investors will be looking ahead to tomorrow’s federal budget, Finance Minister John Manely’s first.

The federal budget is expected to focus primarily on health care. Other areas that will see significant new funding are likely to include defence, the environment, child support, and infrastructure. Other possible measures include an increase in RRSP limits and a phasing out of capital taxes for corporations.