* TSX up 87.10 points, or 0.7 percent, at 12,479.28 * Eight of 10 sectors stronger as resources, banks climb * Strong Chinese manufacturing offsets weak euro zone data By Claire Sibonney TORONTO, April 2 (Reuters) - Toronto's main stock index edged higher o n M onday in a broad- based rally after surprisingly strong manufacturing data out of China trumped further signs of economic contraction in Europe. China's official Purchasing Managers' Index hit an 11-month high with a stronger-than-expected reading, offsetting data that showed an eighth straight month of contraction in the euro zone's manufacturing sector. Canada's resource-heavy index outperformed Wall Street on the brighter news from Chinese data that helped calm worries over demand prospects in the world's second-largest economy. The materials group was up 1.2 percent, energy shares climbed 0.7 percent and financials edged up 0.2 percent. Among the most influential gainers, Royal Bank of Canada rose 0.9 percent to C$58.33, Canadian Natural Resources was up 1.5 percent to C$33.54 and Suncor Energy advanced 0.9 percent to C$32.88. "The (Chinese) purchasing managers index is one of the least gameable pieces of information around the world and that makes it very objective and very important ... and even the optimists were surprised," said Arthur Salzer, chief executive officer of Northland Wealth Management. "It really looks like the Chinese housing market is beginning to bottom here and that they're going to be seeing growth year over year and that's very, very important for Canada given its relationship to the commodity sector," said At 10:55 a.m. (14:55 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 87.35 points, or 0.7 percent, at 12,479.28. Eight of the 10 sectors were in positive territory. In individual company news, Progress Energy Resources surged 10.3 percent to C$11.03 after Malaysia's state oil firm Petronas was reported to be studying plans for a Canadian gas asset acquisition that may exceed $5 billion. "The prices are so low in that part of the energy sector that it makes sense for strategic acquisitions from other companies now," said Salzer. Miner Ivanhoe Resources rose 2 percent to C$16.00 after Chinese aluminum giant Chalco stepped up its diversification, agreeing to pay $926 million for a controlling stake in Mongolian coal miner SouthGobi Resources in a deal with Ivanhoe billionaire Robert Friedland.