* TSX rises 0.32 percent to 12,575.64
* Fertilizer stocks fuel gains as corn futures rally
* Fed discussed further stimulus - minutes (Adds details throughout)
By Ka Yan Ng
TORONTO, Oct 12 (Reuters) - Toronto's main stock index rose to its highest level in more than two years on Tuesday as fertilizer shares soared and as hopes were renewed that the U.S. Federal Reserve will take further steps to stimulate the anemic U.S. recovery.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 40.05 points, or 0.32 percent, at 12,575.64 after sitting in negative territory for much of the day. Eight of the TSX's 10 main groups ended higher.
Fertilizer stocks, part of the materials group, were among the top gainers as Potash Corp's takeover saga still made headlines and as corn futures rallied for a fourth day after the U.S. government slashed its estimates for the size of the crop last week. [ID:nLDE69A0ZI]
Potash Corp (POT.TO) rose 1.02 percent to C$149.01 after the Economic Times reported that China's Sinochem had approached Indian state-run miner NMDC Ltd for a joint bid to buy the world's largest fertilizer producer. [ID:nSGE69A035]
Meanwhile, Britain's Sunday Times reported the Ontario Teachers' Pension Plan was plotting a bid to trump BHP Billiton's (BHP.AX) $39 billion hostile offer for Potash. [ID:nSGE69903N]
"There has been a ton of interest in anything related to fertilizers, given the Potash story is still right up there on investors' minds," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
Surging world grain markets may force BHP Billiton to raise its $130-a-share offer for Potash Corp by 25 percent or more as the recent jump in fertilizer shares has wiped out the initial bid's premium to investors. [ID:nN12167212]
Fertilizer producer and farm products retailer Agrium Inc (AGU.TO) was also a key advancer, closing up 5.32 percent at C$86.49, after hitting its highest level since September 2008 earlier in the session.
Overall, the index's materials sector rose 0.34 percent, largely due to the rise in fertilizer issues. Weakness in gold issues cut into the gains as the price of the precious metal fell.
Research In Motion RIM.TO fell almost 1 percent to C$49.55 after the Economic Times reported the BlackBerry maker was given a new deadline, Jan. 31, by the Indian government for a final solution that would give the government access to all BlackBerry services. [ID:nBMA008590]
One of the company's senior executives told Reuters on Tuesday that the current spat with governments over the lack of access to its networks has not unnerved its key corporate clients. [ID:nLDE69B1OA]
In its rally to the close, the TSX index hit its highest level since Sept. 25, 2008, fueled by expectations the U.S. central bank would flood markets with cheap cash to boost the country's struggling economy. Stimulus hopes have helped to underscore the index's recent rally.
Minutes from the September meeting of the U.S. Federal Reserve released on Tuesday showed the U.S. central bank's policy-setting arm had a "sense" that further support for the economy "may be appropriate before long".
"Quantitative easing is baked in the cake. It's not a very convincing reason to push the markets higher but at this point in time, market participants are thinking that the Fed's buying of more long-term treasuries is going to be the solution that ends all the problems," Picardo said.
"I don't share that view."
$1=$1.01 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway