TORONTO (Reuters) - Toronto's main stock index rallied yesterday as commodity prices got a lift from a weak US dollar and investors sought riskier assets on speculation that a rescue plan was in the works for Greece's debt problems.

Barrick Gold Corp. topped the list of gainers, rising 3.5 percent to C$38.35, while Potash Corp. of Saskatchewan was up 3.4 percent at C$113.10. Royal Bank of Canada climbed 1.4 percent to C$53.81.

Stock markets were boosted by speculation that a special European Union (EU) summit, scheduled for later in the week, would introduce initiatives to help fix Greece's debt woes.

A senior German coalition source said Tuesday that European governments have agreed in principle to help heavily indebted Greece.

People are "less stressed about sovereign debt issues", and that was the impetus that helped drive a quick push up in the market, said Paul Harris, portfolio manager at Avenue Investment Management.

"There was some news with the EU dealing with Greece and that sort of helped ease some pain."

The Toronto Stock Exchange's S&P/TSX composite index ended the day 158.94 points, or 1.43 percent, higher at 11,274.24, with eight of its 10 main groups rising. The materials sector, home to fertiliser and mining companies, rose 4.1 percent, while oil and gas shares climbed 0.9 percent.

Canada's currency firmed against the US dollar yesterday as risk appetite was whetted by reports of European rescue efforts for debt-strapped Greece.

Markets were jittery over a flurry of headlines throughout the day.

They included European Central Bank President Jean-Claude Trichet cutting short a trip to Australia to attend a special European Union summit, and rumours, later denied, that Germany was mulling a bailout package for Greece.

Reuters reported euro zone governments have decided in principle to help Greece in what would be the first rescue of a euro zone member in the currency's 11-year history.