The S&P/TSX composite index was up 102.65 to 11,526.58, with shares of nearly every major Canadian energy player higher.
After a major deal, investors tend to speculate over whether further takeovers could materialize within the same industry. In the energy sector, stocks were up 1.8 per cent, as players like Encana Corp., Nuvista Energy and Suncor Energy all were higher.
The January crude contract on the New York Mercantile Exchange fell 10 cents to US$69.97 a barrel.
Meanwhile, Abu Dhabi's surprise $10-billion bailout to Dubai gave world markets a jolt of optimism. The debt repayments quelled fears that the emirate would default and signal a new round of broader credit problems. Dubai World was up against a Monday deadline to repay the loans.
The spate of good news gave markets another reason to shift higher, though the TSX is well off its high for the year of 11,878 reached in early November.
"What we're seeing is continued small steps towards fixing in the financial system, towards strengthening the various places that are weak,'' said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
"That certainly doesn't eliminate all the possible things that can go wrong, but every small step is a step in the right direction.''
TSX gold stocks were up 1.3 per cent as the February bullion contract on the Nymex rose $4.10 to US$1,124 an ounce.
The Canadian dollar gained 0.14 of a cent to 94.49 cents US.
On Wall Street, the Dow Jones industrial average moved up 23 points to 10,494. The Nasdaq composite index gained 18 points to 2,208 while the S&P 500 index climbed six points to 1,112.
Citigroup Inc. said it will pay back $20 billion in bailout money it received as part of the government's Troubled Asset Relief Program.
The New York-based bank was hardest hit by the credit crisis and rising loan defaults, receiving a total of $45 billion in government support. It only needs to pay back $20 billion because the remaining $25 billion was converted into a 34 per cent ownership stake in the bank earlier this year.
Statistics Canada reported that Canadian industries operated at 67.5 per cent of their production capacity in the third quarter, down marginally from 67.7 in the second quarter.
Stock in oil and gas producer Husky Energy Inc. mover higher after the company said it plans to increase its capital spending by 20 per cent to $3.1 billion in 2010. Shares rose 1.5 per cent, or 45 cents, to $28.95.
TMX Group announced it will distribute trading data across U.S. and Europe on NYSE network under new data technology and distribution agreement. Shares were up 66 cents to $31.02.
Kirkland Lake Gold Inc. said a borehole collapse widened net losses to $10.3 million for the quarter ended Oct. 31, and weakened revenues to $6.9 million, from $8.8 million last year. Shares rose 16 cents to $9.45.
