* TSX up 251.14 pts, or 2.2 pct, at 11,847.70 * Hits highest level since May 7 * Energy, mining shares lead gains * Investors anticipate ECB rate cut, more Fed easing By Jon Cook TORONTO, July 3 (Reuters) - Canada's main stock index hit its highest level in nearly two months on Tuesday, led by a rally in mining and energy shares, as hopes of further monetary easing by central banks helped allay worries about the impact of the euro zone crisis. Raising expectations of more stimulus was a series of troubling economic reports on Monday from the United States, the euro zone and China. U.S. manufacturing shrank in June, according to the Institute for Supply Management. "That ISM number yesterday was quite a disappointment," said Philip Petursson, director of the portfolio advisory group at Manulife Asset Management. "Investors are expecting more stimulus out of the global central banks, including the Fed and Chinese officials, which would be positive for commodities." Weakness in the euro zone economy prompted anticipation of an interest rate cut by the European Central Bank this week. Expectations also rose for an imminent cut in the amount of money banks in China are required to hold as reserves after a state-backed paper urged the move in a front-page editorial. At 11:21 a.m. (1521 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 251.14 points, or 2.2 percent, at 11,847.70. It touched 11,878.16, its highest level since May 7. Gains were led by the heavyweight materials and energy sectors, which both rose more than 3 percent. Copper hit a six-week high, gold rallied and oil topped $101 a barrel for the first time in three weeks on Tuesday as investors bet on improving economic growth. The most influential gainers included Suncor Energy, up 4.3 percent at C$30.71, Cenovus Energy Inc, which rose 5.6 percent to C$34.18, Potash Corp, up 2.5 at C$45.63, Barrick Gold, up 2.6 at C$39.34, and Teck Resources, which climbed 5 percent to C$33.09. Positive North American factory data on Tuesday underpinned the improved sentiment. New orders for U.S. factory goods rose more than expected in May and Canadian manufacturing activity climbed in June to its highest level since September. Canada's resource-heavy index extended its gains from last week, as markets rallied on Friday after euro zone leaders agreed on measures to cut soaring borrowing costs in Italy and Spain and recapitalize banks. On Tuesday, the financial subindex rose 1.4 percent, led by Canada's top banks. Royal Bank of Canada climbed nearly 2 percent to C$53.16, Toronto-Dominion Bank was up 1.4 percent at C$80.10, and Bank of Nova Scotia gained 1.2 percent to C$53.35. However, analysts remained cautious, adding Europe still has not achieved anything concrete to assuage investor fears. "This is perhaps the market grasping at straws," said Petursson. "You have an idea that was put forth last week, but implementation of that idea is still in question." On the negative side, Research In Motion continued its slide, falling 0.8 percent to C$7.48 as Chief Executive Thorsten Heins said on Tuesday there is nothing wrong with the company as it exists now, denying the maker of BlackBerry smartphones is in a "death spiral."