Toronto stocks enjoyed a runaway rally Tuesday, as major oil-patch acquisitions news and surging crude prices had investors in a buying mood. The S&P/TSX composite index finished ahead 198.29, or 1.90%, to close 10,621.22.

The senior exchange was closed yesterday for the August civic holiday.

Volume was 257 million shares.

The rally was broad based, with nine of 10 sub-groups ahead on the day.

The energy sector rose a remarkable 3.82%.

Crude oil prices hit a new record high Tuesday, closing up 32¢ to settle at US$61.89 US a barrel on the New York Mercantile Exchange.

On Monday, a barrel of crude reached an intraday high of US$62.30 before closing at US$61.57, a gain of $1. The death of Saudi King Fahd contributed to market uncertainty over oil supplies.

Also Monday, Houston-based oil and natural gas transporter Kinder Morgan Inc. announced it was acquiring pipeline company Terasen Inc., a key player in the Alberta oil sands, for $3.1 billion US in cash and stock. Kinder Morgan was also assuming an additional US$2.5 billion in debt in the deal. Terasen stock shot up $4.60, or 14.65%, to close at $36.00.

Total E&P Canada Ltd., a subsidiary of French petroleum giant Total S.A., is buying Deer Creek Energy for $1.35 billion in cash. Deer Creek leapt ahead $6.95, or 38.61%, to close at $24.95.

The heavily weighted financials group closed up 1.56%.

Late Tuesday, it was reported Canadian Imperial Bank of Commerce agreed to pay US$2.4 billion to settle claims it helped hide losses at Enron Corp. through a massive accounting fraud. Shares in the bank rose 63¢, or 0.79%, to $80.64.

The Royal Bank of Canada gained $1.98, or 2.56%, to close at $79.38, while the Bank of Nova Scotia rose 70¢, or 1.68%, to close $42.45.

Halterm Ltd., a subsidiary of the Halterm Income Fund, said it will provide container handling services in the port of Halifax to China Shipping (North America) Holding Co. Ltd. under a new three-year deal. The fund’s units gained $1.27, or 21.53%, to close at $7.17.

Saputo Inc. reported a first-quarter profit of $54.2 million, a decline of 7% from the previous year. The dairy company’s stock lost $1.24, or 3.18%, to close finish $37.74.

The junior S&P/TSX venture exchange finished ahead 2.67, or 0.15%, to 1,806.40.

In New York, positive economic news overshadowed a raft of mixed corporate earnings.

The Dow Jones industrial average gained 60.59, or 0.57%, to 10,683.74. Spurred by rising technology stocks, the Nasdaq gained 22.77, or 1.04%, to close 2,218.77, a four-year high. The broad based S&P 500 index moved ahead 8.77, or 0.71%, to close 1,244.12.

The U.S. Commerce Department reported consumer spending was up 0.8% in June, after flat results in May. Incomes, meanwhile, grew 0.5% in June, besting the 0.2% gain in May.

China’s CNOOC Ltd. confirmed it withdrew its US$18.5 billion cash offer for Unocal Corp., citing political opposition in the United States. CNOOC’s withdrawal clears the way for Chevron Corp. to clinch its US$17.4-billion bid for the California-based oil company.

Chevron gained $1.13, or nearly 2%, to close at US$59.56 US on the NYSE, where CNOOC’s shares rose $4.15, or 6%, to US$73.49 and Unocal’s shares edged up 16¢ to US$64.53.