TORONTO (Reuters) - Toronto's main stock index rose sharply yesterday after healthy demand at several euro zone debt auctions and a subsequent rally in commodity markets whetted investor appetite for riskier assets.

The index's financial sector shot up 2.3 percent as Royal Bank of Canada, the country's largest lender, gained 1.8 percent to C$54.71, and Canadian Imperial Bank of Commerce soared 3.2 percent to C$75.00.

"The financials on the TSX are actually leading the way. That's consistent pretty much across the globe," said Jean-Francois Dion, vice-president and portfolio advisor of Canadian equities at RBC Dominion Securities.

"There seem to be some signs of improvement on the European credit side of things that's causing a little bit of optimism out there."

The gain for CIBC also came a day after Canada's No. 5 bank agreed to buy Citigroup's C$2.1 billion Canadian MasterCard business, becoming a dual credit card issuer with its existing Visa business.

Spain, Belgium and Ireland all sold government debt at auctions that attracted solid demand and lifted some of the gloom over Europe's debt crisis. That helped the euro rally against the dollar and pushed some commodities higher.

Key prices of oil, gold and copper all gained, supporting the index's heavily weighted energy and materials sectors.

Some of the biggest advancers included Suncor Energy , up 2.9 percent at C$34.48, Barrick Gold Corp, up 1.6 percent at C$44.02, and Teck Resources, up almost 4 percent at C$36.50.

Also driving the push into riskier assets, the S&P 500's more than two percent rise pushed the index above its 200-day moving average, a level it has struggled to breach for the last month and that signals bullish momentum.

The Toronto Stock Exchange's S&P/TSX composite index ended up 240.2 points, or 2.06 percent, at 11,907.54. All of its 10 sectors were higher.

Even with the successful debt auctions in Europe, market watchers were hesitant to point to a single factor for the renewed investor confidence.

"There's been quite a bit of short-covering pretty much across the board," Mr. Dion said.

"Aside from that, it's been very, very quiet and it's very hard to find a single catalyst for today's action."