Toronto stocks rallied Tuesday, with the energy, financials and materials sectors putting in strong sessions, as investors cheered a Bank of Canada decision to keep lending rates steady.

The S&P/TSX composite index gained 138.25 points, or 1.19%, to 11,792.98.

The Canadian central bank left its key interest rate at 4.25% and appeared to suggest in its announcement that inflation would be less of a concern in the next 18 months, negating any need to increase rates.

Eight of the 10 TSX main sub-groups were up.

The energy index gained 1.61%. The August contract for light, sweet crude climbed 55¢ at US$74.16 a barrel.

Petro-Canada lifted 28¢, or 0.53%, to $52.98.

The materials sector was up 1.93%, while the gold sub-sector gained 3.01%. Gold for August delivery ended up $17 at US$643.10 an ounce.

Swiss miner Xstrata PLC raised its bid for Falconbridge Ltd. to $59 a share in cash. Falconbridge shares rose $1.40, or 2.39%, to $60.10 on heavy volume.

The financials sector advanced 1.06%.

Manulife Financial Corp. gained 11¢, or 0.30%, to $37.

The Canadian dollar lost value in the face of the Bank of Canada decision. The loonie slipped 0.53 of a cent to close at US88.35¢ on currency markets.

The S&P/TSX Venture composite index dipped 6.67 points, or 0.25%, to 2,637.37.

In New York, markets ended higher, after spending most of the session in negative territory, as investors remained bullish entering quarterly earnings report season.

The Dow Jones Industrial Average rose 31.22 points to 11,134.77. The tech-heavy Nasdaq composite index rose 11.93 points to 2,128.86. The S&P 500 gained 5.18 points to 1,272.52.