TORONTO (Reuters) - Toronto's main stock index had its highest finish in more than two years yesterday as commodity prices surged on expectations the US Federal Reserve would follow in the footsteps of the Bank of Japan and take steps to stimulate the economy.

"The real highlight is materials stocks, especially gold stocks," said Jean-Francois Dion, vice-president and portfolio advisor of Canadian Equities at RBC Dominion Securities. "A lot of anticipation around the quantitative easing programme coming from the Fed at its next meeting - that's putting pressure on the US dollar, really helping gold and metals."

The S&P/TSX composite index finished up 175.06 points, or 1.42 percent, at 12,498, it highest close since September 26, 2008.

The index's key materials sector rose 2.3 percent, driven by a strong showing from base-metals miners including Teck Resources Ltd, which jumped 4.1 percent to C$44.06, and Inmet Mining Corp., which was up 3.3 percent at C$58.72.

Gold miners, buoyed by record bullion prices, were also higher. Barrick Gold Corp rose 2.3 percent to C$48.18, and Kinross Gold Corp. climbed 2.7 percent to C$19.79.

Bullion surged to record levels and copper hit two-year peaks after the Bank of Japan's pledge yesterday to keep credit easy stoked expectations the Fed would do the same, weakening the greenback.

Investors often shift toward the precious metals as a safe haven and hedge against inflation.

"The trade seems to be just believing governments are going to pull out all the stops to try to restart demand, which hasn't worked so far," said Danielle Park, who helps manage C$200 million ($197 million) as a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario.