Canadian stocks climbed higher for a second day on Monday, as strength in energy and materials companies pulled the benchmark index up more than 7%.

The S&P/TSX composite index gained 688.91 points, or 7.2% to close at 10,251.40.

Oil futures rallied 3.3% after indications that OPEC may reduce crude output. Crude for November delivery closed up US$2.40 at US$74.25 a barrel on the New York Mercantile Exchange.

The rally sent TSX energy shares up a generous 14.29% on the TSX. This included a 15.94% gain for shares of Canadian Natural Resources Ltd., which closed at $58.55, and a 14.41% boost in shares of EnCana Corp., which finished at $57.07.

In addition, Petro-Canada shares soared 20.44% to close at $31, and shares of Petrobank Energy and Resources Ltd. gained 17.57% to end the day at $27.50.

The materials group was up 10.84% led by significant gains for fertilizer companies. Potash Corp. shares soared $8.75, or 9.86% to close at $97.45, and Agrium Inc. shares enjoyed a hefty 6% gain to end at $44.28.

Gold companies were also on the rise after gold futures bounced back from seven days of declines. Gold for December delivery gained US$2.30, or 0.3%, to finish the day at US$790 an ounce on the Comex division of the New York Mercantile Exchange.

The sub-gold index gained 12.39%.

Shares of Barrick Gold Corp. gained $4.32, or 15.42%, to close at $32.33 and Goldcorp Inc. shares rose 13.78% to finish at $26.75.

Financial stocks moved higher by 5% on speculation that the Bank of Canada will cut interest rates on Tuesday. Shares of Royal Bank increased 7.74% to end at $49.83 and Canadian Imperial Bank of Commerce shares gained 5.16% to close at $60.99.

Shares of Research in Motion dropped $5.90, or 8.34% to close at $64.88 after a Morgan Keegan & Co. analyst cut sales and earnings estimates on the Blackberry phone maker. This brought the information technology group of shares down a slight 0.05% — the only main TSX group to post a loss on Monday.

The Canadian dollar slipped another 0.48 of a cent to finish at US83.77¢, after reports showed wholesale sales fell in August and foreigners decreased their holdings of Canadian securities for a second month.

Junior companies on Toronto’s S&P/TSX Venture composite index gained 38.82 points, or 4.1%, to close at 984.94.

Equities south of the border also rose on optimism surrounding the possibility that another fiscal stimulus package is on the way.

The Dow Jones industrial average gained 413.21 points, or 4.7%, to 9,265.43. The S&P 500 index climbed 44.85 points, or 4.8%, to 985.40, and the Nasdaq composite index rose 58.74 points, or 3.4%, to 1,770.03.