* TSX rises 49.85 points, or 0.40 percent, to 12,426.90 * Materials and financial sectors drive gains * Potash rises after Israel Chemical takeover report * Cenovus up 1.73 percent after upgrade By John Tilak TORONTO, Oct 31 (Reuters) - Canada's main stock index rose on Wednesday, as the materials sector rose with higher commodity prices and after Potash Corp said it has ramped up efforts to acquire a smaller rival. The materials group rose 1.28 percent. Potash gained 0.8 percent at C$40.29 after the fertilizer company confirmed its interest in increasing its stake in Israel Chemical Ltd. Volumes on Toronto's stock market picked up as U.S. equity markets resumed trading after a two-day closure due to massive storm Sandy. "It's a fairly positive tone here. There is nothing acting as a dramatic catalyst," said Bob Gorman, chief portfolio strategist at TD Waterhouse. At midafternoon, the Toronto Stock Exchange's S&P/TSX composite index was up 49.85 points, or 0.40 percent, at 12,426.90. Eight of the 10 main subgroups were positive. The index rose as high as 12,456.81, the highest level since Oct. 19 "People are certainly feeling more confident in the resource sector," said Paul Harris, portfolio manager at Avenue Investment Management. "Canadian stocks have been beaten up this year. You're seeing some pickup of that." Other material stocks driving the market were Silver Wheaton Corp, up 3 percent at C$40.29, and Yamana Gold Inc , which rose 2.57 percent to C$19.98. Gold prices rose to their highest in a week. Financial stocks were up 0.5 percent, led by the Bank of Nova Scotia, which was up 0.63 percent at C$54.48. Toronto-Dominion Bank, Canada's second-largest bank, rose 0.28 percent to C$81.34. "There's a feeling of confidence. It isn't going to go overboard. It is managed confidence that we're seeing is reflected in the market," said Fred Ketchen, director of equity trading at ScotiaMcLeod. The energy sector was down 0.17 percent as Encana Corp , Canada's largest gas producer, fell 2.76 percent to C$22.51. But Cenovus Energy Inc, Canada's No. 2 independent oil producer, was one of the biggest drivers of the market's gains. The shares rose 1.73 percent to C$35.38 after SocGen upgraded its recommendation to "buy" from "hold." Commodity prices rose as recovery efforts began following Sandy, one of the biggest-ever storms in U.S. history. Brent crude rose to about $109 a barrel, though the gains were limited by concerns over demand impact on the United States.