TORONTO (Reuters) - Toronto's main stock index shot to its highest closing level in 14 months yesterday in a broad rally powered by gold and energy producers.

Shares of Barrick Gold Corp, which headlined the gain, rose 7.45 percent to C$48.20 after the company said it had eliminated its fixed-price hedge book, allowing the miner to take full advantage of rising gold prices.

Goldcorp shares followed with a gain of 6.4 percent to C$46.90, while shares of Kinross Gold ended up five percent at C$22.09.

The rush into gold-mining shares came as the price of gold hit a record high above $1,200 an ounce as a weak US dollar fuelled buying of the metal as an alternative asset.

Energy shares also played a key role in the rally as concerns that Dubai's debt problems would set back the global economic recovery waned, boosting oil prices.

Suncor Energy rose 3.4 percent to C$39.20, while EnCana Corp ended up 1.8 percent at C$57.63.

The rise in Toronto stocks followed gains in overseas equities as sentiment got a lift from receding concerns about the impact of Dubai's debt woes.

"The Dubai thing itself has proved to be what they call a storm in a teacup, not a big deal one way or the other," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver. "So maybe some short-covering going on."

The S&P/TSX composite index closed 260.12 points, or 2.27 percent, higher at 11,707.32. It was the index's highest close since October 2008.

All 10 of the TSX's 10 sectors ended in higher territory.