TORONTO (Reuters) - Toronto's main stock index ended higher yesterday as investors hoped for a higher bid for takeover target Potash Corp, while gold miners also rose.

Investors continued to fixate on developments in BHP Billiton's $39 billion offer for Potash Corp . BHP said it would take its $130-a-share bid directly to shareholders, bypassing Potash Corp's board, which a day earlier called the bid "grossly inadequate".

Potash Corp shares gained 3 percent to C$151.75, helping the materials sector climb 1.9 percent. On Tuesday, Potash soared 26 percent.

"They're betting on either BHP raising their offer or another competitor coming in and competing for Potash," Aaron Fennell, senior market strategist at Lind-Waldock Canada, said of investor reaction to the news.

"What is happening on the Potash side is good for the economy," said Luc Girard, who helps manage about C$18 billion as a director of the portfolio advisory group at Desjardins Securities in Montreal. "On the TSX every company - except for telecommunications or the bank side - all the companies are potential takeover targets."

Investors and acquirers can take advantage of lower price- to-earnings ratios in S&P/TSX stocks to profit from commodity demand in growing economies in such countries as Brazil Russia, China and India, Girard said.

After a 2.3 percent slide in the index last week, shares in the Canadian benchmark trade at 17.91 times the past 12 months earnings, down from more than 22 times in January.

The Toronto Stock Exchange's S&P/TSX composite index capped the day up 52.44 points, or 0.45 percent, at 11,781.08, with eight of its 10 main groups higher.

Gold stocks helped boost the resource-heavy index, with Barrick Gold up 1.4 percent at C$46.50, while Goldcorp rose 3.9 percent to C$43.92. Agnico-Eagle advanced 1.3 percent to C$64.89.

The price of gold rose to a one-and-a-half month high after being lower early in the day, extending its rally to a fifth session on strong physical demand and technical buying.