TORONTO (Reuters) - The Toronto Stock Exchange's main index ended higher yesterday as renewed takeover talk surrounding Alcan Inc. drove up metals and mining issues, which have gained in seven of the past eight sessions.The S&P/TSX composite index closed up 34.16 points, or 0.24 percent, at 14,166.09.

"It's the individual stocks that are running the market today and it's heartening to see that everything is holding," said Irwin Michael, portfolio manager at ABC Funds.

Alcan was centre stage, with sources expecting news by the end of the week regarding a friendly offer that would thwart a $28.8 hostile bid from Alcoa Inc.

"You wake up every morning and there's yet another merger and acquisition contemplated <\m> and everyone's watching Alcan," Michael said, noting Alcan accounted for about a quarter of the TSX's upside yesterday.

The aluminum giant was by far the biggest gainer by weight, surging C$4.20, or 4.7 percent, to C$94.40. Elsewhere in the sector, Teck Cominco was up C$1.46, or 3.1 percent, at C$48.91.

Rising gasoline inventories in the United States undercut crude oil prices, but producers in Canada's oil patch managed a modest gain for the fifth straight session.

The energy sector, which accounts for about 30 percent of the overall index, edged up 0.2 percent. Nexen Inc. climbed C$1, or three percent, to C$34.56.

Only two of the index's 10 main groups declined, including the utilities sector, off 1.1 percent.

Over the past decade, that sector has showed the highest median returns of any TSX group through episodes of rising interest rates, according to David Wolf, an economist and strategist at Merrill Lynch.

On Tuesday, the Bank of Canada raised its key rate 25 basis points to 4.50 percent and suggested there may be more tightening to come.

The "tightening cycle now under way probably poses little threat to either the Canadian equity market or theoretically rate-sensitive sectors within it," such as utilities, Wolf wrote yesterday in a research note.

Since mid-May, the main TSX index has topped out near the 14,200-mark three times, creating a ceiling as the summer's thin trading season sets in.