* TSX rises 0.29 percent to 11,538.39
* Potash Corp shares jump 5.7 pct on takeover speculation
* Bank of Canada interest rate announcement on Tuesday (Adds details, updates to the close)
By Ka Yan Ng
TORONTO, Oct 19 (Reuters) - Toronto's main stock index finished higher on Monday, lifted by speculation that Potash Corp of Saskatchewan (POT.TO) could be taken over.
Shares of Potash Corp rose more than 5 percent, leading all advancers, after a Bank of America Merrill Lynch research report touted the idea that Australian mining giant BHP Billiton (BHP.AX) (BLT.L) could afford to make an all-cash bid for the world's largest fertilizer maker. [ID:nN19132987]
Potash Corp stock ended up 5.7 percent at C$106.84.
Fellow fertilizer company Agrium (AGU.TO) gained 6.4 percent to C$58.90 after it agreed to sell part of a nitrogen fertilizer facility to Terra Industries TRA.N. [ID:nN19341430]
A retreat by gold-mining issues partly offset the gains made by the fertilizer companies, even though the price of gold pushed above $1,060 an ounce. Goldcorp (G.TO) fell 0.5 percent to C$43.80.
Oil hit a one-year high above $79 a barrel, lifting some of the bigger names in the oil and gas group, including a 1.15 percent gain for Nexen Inc NXY.TO to C$26.38 and a 0.45 percent gain in Suncor Energy (SU.TO) to C$40.16.
The S&P/TSX composite index .GSPTSE closed up 33.63 points, or 0.29 percent, at 11,538.39.
"Clearly it's still a market of stock-picking and that's what is going to drive the market here," said Irwin Michael, portfolio manager at ABC Funds. "But we expect it to continue to be very volatile."
The main index could be swayed by the looming wave of corporate results, with companies such as Canadian National Railway (CNR.TO) and Potash Corp set to issue financial reports this week.
CIBC World Markets said third-quarter earnings will help gauge the ability of corporate Canada to weather the impact of the rising Canadian dollar, which is up 13 percent since the end of June. [ID:nN19390560]
The index's gains came ahead of a Bank of Canada policy statement on Tuesday, in which the bank will likely hold the line on interest rates and perhaps tinker with its economic forecasts as it waits for firmer evidence that the economic recovery is for real. [ID:nN19366608]
"We have a lot of cross-currents," said Sal Masionis, a stockbroker at Brant Securities, pointing to examples such as a relatively high unemployment rate, while the housing sector has shown signs of strength.
Active issues in the oil patch also included Enerflex Systems Income Fund EFX_u.TO, which hit a 52-week high after it said it has formed a special committee of independent directors to consider the C$597 million buyout proposal from Toromont Industries TIH.TO. Enerflex units rose 40.22 percent to C$14.12. [ID:nBNG508346]