TORONTO (Reuters) - Toronto's main stock index ended higher yesterday, recouping some of the losses of the previous two sessions, as fears over euro zone sovereign debt ebbed and healthy corporate earnings boosted optimism.

Investors were willing to take on risk again after Greece readied severe austerity measures to secure multi-billion-dollar aid plans, providing relief to financial markets.

The move paved the way for the heavyweight financial and resource sectors to lead the Toronto index higher, which had lost 1.66 percent over two days on fears stirred up by downgrades to the credit ratings of Greece, Portugal and Spain.

Oil and gas issues were supported by the price of crude oil above $85 a barrel, as well as climbing profits at Canada's big oil sands producers.

Imperial Oil rose 0.68 percent to C$43.18, while Cenovus shares jumped 4.72 percent to C$29.94. Canadian Oil Sands Trust edged up 0.06 percent to C$31.26.

"The main thing is that the market is pretty happy about the earnings. We got a bit of a cloud because of Greece, but that cloud dissipated today," said Luciano Orengo, portfolio manager at MFC Global Investments.

The Toronto Stock Exchange's S&P/TSX composite index ended 123.43 points, or 1.02 percent, higher at 12,200.32. Nine of its 10 sectors were higher, with four posting gains of 1 percent or more.

The financials group rose 1.68 percent, reversing the previous day's more than 1 percent drop, with Royal Bank of Canada, the country's biggest lender, surging 3.12 percent to C$62.47, and No.2 Toronto-Dominion Bank adding 1.77 percent to C$75.95.