TORONTO (Reuters) - Toronto's main stock index shot higher yesterday after an OECD report said the global economic outlook has improved for the first time in two years.

The TSX index's financial group led the index higher with a gain of 2.74 percent after the Organisation for Economic Co-operation and Development said the outlook has improved for the first time in two years.

That helped lift shares of Royal Bank of Canada 3.2 percent to C$45.49, while insurer Manulife Financial followed with a gain of 4.2 percent to C$21.09.

The rise came after Tuesday's modest gain and Monday's 453-point sell-off, which was spurred by a World Bank warning that prospects for the global economy remained "unusually uncertain". Monday's drop was the TSX index's biggest point loss since December.

All 10 of the TSX index's sectors rallied yesterday after the OECD said that the slowdown in its 30 member countries was near the bottom.

"Investors are overreacting to both the bad news and the good news, which tends to be a characteristic of economies that are in the process of turning," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"So it's not just that people saw good prices, it's that they are really overreacting to the slight bit of good news today just like they overreacted to a bit of not so good news on Monday."

The S&P/TSX composite index rose 204.21 points, or 2.06 percent, to 10,100.93. It is still down 1.8 percent on the week because of the steep Monday sell-off.