TORONTO (Bloomberg) — Canadian stocks had their steepest advance in a month, as gold producers including Barrick Gold Corp. rallied on higher bullion prices. Financial companies advanced on the prospect of lower US interest rates.The Standard & Poor’s/TSX Composite Index gained for the first time in three days, climbing 134.42, or 1.1 percent, to 12,852.59 in Toronto. The S&P/TSX, which had its largest gain since November 29, was closed on December 25 and 26 for the Christmas holidays. It has gained 14 percent this year and is headed for its fourth straight annual rise on increases in commodity prices.

“We’re basically bullish on gold as a result of a weaker US dollar,” said David Cockfield, who helps manage $1.1 billion at Leon Frazer & Associates Inc. in Toronto. “I think people are starting to take positions for ‘07 and generally it looks like the US dollar is going to be weaker in ‘07.”

The US dollar fell the most in more than a week today against the euro after the United Arab Emirates said it will convert some of its US currency reserves into euros. A decline in the value of the dollar makes gold cheaper for buyers using other currencies because the metal is priced in US dollars.

Gold futures climbed for a third day. The February contract rose $3.40, or 0.5 percent to $630.30 an ounce on the Comex division of the New York Mercantile Exchange.

Barrick, the world’s largest gold producer, jumped C$1.10 to C$35.46. Goldcorp Inc., the second biggest, advanced C$1.31 to C$32.77.

“The economic outlook for Europe is not bad whereas I think the US outlook continues to deteriorate,” Cockfield said.

Teck Cominco, operator of the world’s biggest zinc mine, advanced C$3.33 to C$87.08.

Copper futures for March delivery added 1.3 percent to $2.914 a pound in New York after sales of new homes in the US rose more than forecast in November, signalling demand for the metal may rebound.

Ivanhoe Mines Ltd., which is building a copper and gold mine in Mongolia, rose 58 cents to C$11.63.

A gauge of materials stocks rose 3.2 percent today, adding to the 37 percent gain for 2006, the best among the ten industry groups in the S&P/TSX.

Speculation the US Federal Reserve may lower rates to boost the economy also supported financial stocks. Toronto- Dominion Bank, Canada’s second-biggest bank, climbed 86 cents to C$69.26.