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* TSX rises 124 points to 8,720.39
* Banks and insurers power latest gain
* First monthly gain since August 2008 (Adds details, comments and official numbers)
By Frank Pingue
TORONTO, March 31 (Reuters) - Toronto's main stock index shot higher on Tuesday as upbeat news from European financial institutions lifted sentiment, capping off the first monthly gain for the index since August.
Financial shares at home and abroad rose, encouraged after Barclays Bank declined to take part in a British government asset-protection plan and Belgian-Dutch Fortis NV outlined its future as a viable insurance group. [ID:nLR449530] and [ID:nLV380962]
Shares of Royal Bank of Canada (RY.TO), the key driver of the latest gain, shot 2.7 percent higher to close at C$36.78, while Toronto-Dominion Bank (TD.TO) shares rose 3.5 percent to end the session at C$43.46.
"The markets in general and the TSX have been beaten down to such extreme levels due to this unprecedented panic that we saw," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
"So this may the first stage of a rebound that could take indices fairly higher from these levels, and it's going to be volatile. But the fact that the TSX had its first positive month in seven is certainly a positive sign."
The S&P/TSX composite index .GSPTSE rose 124.17 points, or 1.44 percent, to close at 8,720.39 on Tuesday. At one point in the session it was up 2.15 percent.
$1=$1.26 Canadian Additional reporting by Jennifer Kwan; editing by Peter Galloway