TORONTO (Bloomberg) - Canadian stocks notched their second-biggest gain of the year, rallying from a three-week low as gold mining shares advanced on speculation that the recession will increase the metal's appeal as a safe haven.

Barrick Gold Corp. rose the most since December 29, leading raw-materials producers higher. Research In Motion Ltd. climbed 10 percent as rival Apple Inc. extended a slump. Royal Bank of Canada pared its drop and finance shares rallied after concern US banks will need more aid was allayed by a report that Citigroup Inc. denied speculation the US will take it over.

The Standard & Poor's/TSX Composite Index added 2.2 percent to 8,879.61 in Toronto, the most since January 2, after dropping earlier in the session to 8,470.97, the lowest since December 24.

"Gold stocks are the best place to be in the materials sector," said Pierre Lapointe, a market strategist at National Bank Financial in Montreal. "Canadian banks are in a lot better shape than the US banks. If the financial system is not sound you won't have an equity rally."

First-time claims for US unemployment benefits rose more than expected and prices paid to producers fell 1.9 percent. Bank of America, the biggest US bank, fell to an 18-year low in New York trading. Citigroup slid as much as 26 percent. Both rallied after Fox Business Network reported Bank of America may get only $15 billion from the US Treasury and CNBC reported that Citigroup denied it is in talks to be nationalised.

Research In Motion (RIM), the maker of the BlackBerry smart phone, rose 10 percent to C$62, the highest intraday price since November 5. Apple, whose iPhone competes with RIM's handsets, slid for a fifth day in US trading after founder andCEO Steve Jobs said yesterday that he will take a medical leave until the end of June.

Barrick Gold, the world's biggest bullion producer, gained 6.9 percent to C$42.06. Goldcorp Inc. rose four percent to C$31.50. Agnico-Eagle Mines Ltd., owner of Canada's largest gold deposit, surged 7.1 percent to C$60.22.

Measures of information technology and raw-materials stocks added 8.1 percent and 4.3 percent, respectively, as all 10 industries in the S&P/TSX rallied.

EnCana Corp., North America's biggest publicly traded natural-gas producer, advanced 3.8 percent to C$56.70, rebounding from a decline of more than three percent even as oil and gas prices fell in New York. Gas stocks may have been supported today by speculation that the coldest weather since 2004 in the US Northeast may boost power usage and thus demand for natural gas, which is burnt in many power plants.

Royal Bank, the nation's biggest lender by assets, fell 2.3 percent to C$34.04, paring an earlier drop of as much as 5.9 percent. Canadian Imperial Bank of Commerce, the lender with the biggest credit-related writedowns, slid 0.7 percent to C$48.51.

Manulife Financial Corp. added 3.2 percent to C$22.93. Canada's biggest insurer dropped 4.5 percent earlier yesterday.

Bombardier Inc. climbed 4.9 percent to C$4.75. The world's third-largest maker of commercial aircraft said that Pinnacle Airlines Corp.'s Colgan Air unit ordered 15 Q400 turboprops, worth about $432 million contract.

Rogers Communications Inc. added 4.9 percent to C$33.29. Canada's biggest cable-services provider advanced after rival Shaw Communications Inc. reported profit that matched analysts' expectations, increased subscriber numbers, and raised the dividend. Shaw, the nation's second-largest cable company, gained 4.5 percent to C$20.85, the most in five weeks.

National Bank Financial has an end-of 2009 target of 9,800 points on the S&P/TSX, Mr. Lapointe said in a phone interview. The Canadian index is in a "bottom-building process," Mr. Lapointe said, and may rally about six months before he expects the recession to end in the second half of this year.