TORONTO (Bloomberg) - Canadian stocks gained for a second day as a rally in gold shares outweighed a decline in banks and insurers, after prices for bullion advanced on demand for the precious metal during the global economic slowdown.

Barrick Gold Corp., the world's largest bullion producer, climbed 3.7 percent, driving an index of miners and raw-materials makers to the steepest gain among 10 industry groups. Goldcorp Inc. rallied 4.9 percent and Agnico-Eagle Mines Ltd. jumped 4.1 percent after UBS AG recommended buying the stocks. ING Canada Inc. slumped 15 percent on a plan by its parent to sell shares.

The Standard & Poor's/TSX Composite Index rose 1.2 percent to 8,693.09 at 4.10pm in Toronto, paring its 2009 loss to 3.3 percent. The materials index rose 3.9 percent. Financial companies, which account for 28 percent of the main benchmark, declined 1.3 percent on concern that a U.S. proposal to bolster bank balance sheets by creating an entity to hold bad assets has not been completed.

"There is a lot of talk of the bad bank but there is very little detail," said Pierre Lapointe, a market strategist at National Bank Financial in Montreal. "This is of paramount importance because we've never seen an end-of-recession rally without the strong contribution from banks. They are like oil for an engine."

Bullion advanced 1.1 percent to $902.20 in New York after UBS AG said gold will average $1,000 an ounce this year. Today's estimate is 43 percent higher than UBS's previous forecast.

Barrick Gold gained C$1.61 to C$45.73, Goldcorp advanced $1.72, to C$36.52 and Agnico-Eagle increased C$2.55 to C$64.90.

ING Canada fell C$4.97 to C$28.82, the steepest decline since December 2004. The company's Dutch parent, ING Groep NV, said it plans to sell its 70 percent stake in Canada's largest property and casualty insurer at a discount to shore up its balance sheet.

Royal Bank of Canada, Canada's biggest bank by assets, slipped 0.8 percent to C$30.62, while Canadian Imperial Bank of Commerce slid 2.3 percent to C$45.44. CI Financial Corp. fell 3.5 percent to $14.

Bombardier Inc., the world's third-largest maker of commercial aircraft, rose the most in three months as analysts said concerns that demand is slipping were overblown. Investors recognised the stock as "a great buying opportunity", said Scotia Capital Inc. analyst David Tyerman. Bombardier had slid to "ridiculously cheap" levels, Tyerman said in an interview. The shares dropped 27 percent in three days through to February 2.

Bombardier rose 7.2 percent to C$3.72.