TORONTO (Bloomberg) — Canadian stocks rose to a record for a second straight day after Algoma Steel Company said it was in take-over talks with Germany’s Salzgitter AG, spurring merger speculation. Sunrise Senior Living REIT surged after receiving a second bid.“There’s a lot of money available for M&A,” said Mario Richard, who helps oversee $7.5 billion as senior portfolio manager at Sceptre Investment Counsel in Toronto.

“Companies have clean balance sheets and are generating big cash flows. Many, rather than building a new plant, will try to buy existing assets. M&A will probably be here for some time.”

The Standard & Poor’s TSX Index gained 83.70, or 0.6 percent, to 13,288.16 in Toronto. It’s up 2.9 percent this year.

The value of mergers and acquisitions involving Canadian companies was $296.5 billion in 2006, almost double the $151.3 billion in 2005, according to Bloomberg data.

Some of the largest deals recently have involved materials companies such as Novelis, which agreed this week to be bought for more than $3.4 billion by India’s Hindalco Industries. A five-year rally in metals prices spurred more than $157 billion globally, of take-overs and merger plans in the industry last year.

The boost from mergers and acquisitions outweighed declines in some energy shares such as Nexen, on lower earnings.

Algoma rose C$5.76, or 13 percent, to C$50.44, valuing the company at C$1.61 billion ($1.38 billion). The shares, which surged to C$57.99 earlier, pared gains after the company put out its statement confirming a Globe and Mail report that the potential bidder was Salzgitter.

Talks with Salzgitter “are at a very preliminary stage,” Sault Ste. Marie, Ontario-based Algoma said.

Any offer “is likely to be below” the current price of the shares, it said. Salzgitter confirmed the talks in a separate statement.

Ipsco, another steel maker, today climbed C$6.55, or 5.6 percent, to C$125.13.

Stelco, which exited bankruptcy in April and hasn’t posted a quarterly profit since, climbed C$3.15, or 16 percent, to C$23.40.

Teck Cominco, a zinc miner, added C$1.75 to C$87.48.