The Toronto Stock Exchange surged sharply higher on Tuesday as news of an unexpected jump in U.S. consumer confidence sparked a wave of optimism among investors on both sides of the border.

The S&P/TSX composite index soared 216.40 points, or 2.2%, to close at 10,285.90.

Financial stocks led the gains, jumping 4.6% on Tuesday, as the first of the big banks reported financial results for the second quarter.

The Bank of Montreal reported net income of $358 million in its second fiscal quarter ended April 30th, down sharply from profits of $642 million a year earlier. Still, the bank’s results beat analyst expectations, sending its stock up $2.15, or 5.2%, to $43.71.

Shares of Royal Bank of Canada surged 5.6% to $45.05 and Manulife Financial Corp. rose 4.6% to $23.12.

Toronto-Dominion Bank’s stock jumped 6% to $51.97 and CIBC gained 5.4% to $58.80.

Bank of Nova Scotia shares soared $2.02, or 5.5%, to $38.81.

The energy group gained 1.9% on Tuesday as oil futures advanced. Crude for July delivery rose US$0.78, or 1.3%, to end at US$62.45 a barrel on the New York Mercantile Exchange.

Suncor Energy Inc. saw its shares rise 2.7% to $36.62.

Canadian Natural Resources Ltd. jumped 3.3% to $62.36 and Talisman Energy Inc. gained 2.9% to $17.82.

Shares of Imperial Oil Ltd. advanced 4.2% after Monday’s news that the company would go ahead with its $8-billion Kearl oil sands project. Imperial Oil shares gained $1.78 to end at $44.01.

On the Comex division of the New York Mercantile Exchange, gold for June delivery fell US$5.60, or 0.6%, to end at US$953.30 an ounce. Lower gold futures dragged the TSX sub-gold index down 0.4% while the materials group remained nearly flat, dipping just 0.1%.

Lower for the day was Barrick Gold Corp., down 3.7% to $41.19, and Iamgold Corp., off 1.4% to $11.72.

Gainers included Kinross Gold Corp., higher by 1.2% to $21.34, and Potash Corp., up 1.2% to $130.86.

The junior S&P/TSX Venture composite edged up 0.73 points, or 0.1%, to close at 1,097.16.

The Canadian dollar added nearly half a cent to close at US89.46¢.

The loonie climbed despite news that the federal budget deficit will rise to more than $50 billion due to the economic slowdown.

South of the border, the main stock market indexes also advanced sharply after the U.S. Conference Board reported a steeper than expected rise in the consumer confidence index in May, to 54.9. The index is now at its highest level since before the intensification of the credit crisis in September of last year.

The Dow Jones industrial average gained 196.17 points, or 2.4%, to 8,473.49, snapping a four-day losing streak.

The S&P 500 index rose 23.33 points, or 2.6%, to end at 910.33.

The Nasdaq composite index rallied 58.42 points, or 3.5%, to 1,750.43.

IE