TORONTO (Reuters) - Toronto's main stock index snapped a three-session skid yesterday, finishing more than one percent higher as a rise in commodity prices gave a boost to the resource-heavy market.

Forecast-beating results from US bellwether Alcoa helped lift market sentiment early in the day, with the upbeat mood spreading to key commodity prices such as gold and oil.

The aluminum giant kicked off the US earnings season by reporting a third consecutive quarterly loss, but it beat estimates by a large margin due to cost cuts.

"That certainly started the market out quite strong. Their loss being less than expected was a big boost, which probably fed through to oil and other commodities too," said Michael Sprung, president of Sprung & Co Investment Counsel.

"People were taking that as a sign of...things not being as bad as feared."

The S&P/TSX composite index finished up 120.47 points, or 1.25 percent, at 9,773.92. Eight of its 10 main groups were higher.

The energy sector rose 2.6 percent as the price of oil jumped above $60 a barrel. EnCana shares climbed 2.1 percent to C$53.24, while Suncor Energy gained 2.8 percent to C$31.30.

The materials sector rose 1.87 percent, as Potash Corp of Saskatchewan Inc, the most influential mover higher, gained 3.24 percent to C$108.80.

The Canadian dollar climbed against the US dollar yesterday as higher commodity prices and a rebound in global equities helped ease investor aversion to risk, boosting currencies perceived to be riskier than the greenback.

The rise in the Canadian dollar, which rallied as high as C$1.1547 to the US dollar, or 86.60 US cents, lifted it comfortably off the seven-week low it touched this week.

"Equity markets have bounced back...so that's provided some comfort for people that take on riskier positions," said David Watt, senior currency strategist at RBC Capital Markets.

The Canadian currency finished at C$1.1623 to the US dollar, or 86.04 US cents, up from C$1.1676 to the US dollar, or 85.65 US cents, at Wednesday's close.