* TSX up 200.91 points, or 1.7 percent, at 11,863.50 * Highest closing level for index since July 4 * Mining, energy shares lead gains as commodities rise * Sentiment boosted by hopes of further ECB action By Alastair Sharp TORONTO, Aug 7 (Reuters) - Canada's main stock index closed at its highest level in more than a month on Tuesday, boosted by investor hopes for more central bank action in Europe and a bounce in energy and mining shares as commodity prices rose. Toronto stocks followed global markets, which have enjoyed a strong run so far this week on investor expectations the European Central Bank will buy bonds to ease the pressure on Spain and Italy, albeit under strict conditions that have yet to be fully worked out. "Given that valuations remain very reasonable, both solid fundamentals in conjunction with some decent macro-economic news continue to see the market going higher," said Bob Gorman, chief portfolio strategist at TD Waterhouse. The Toronto Stock Exchange's S&P/TSX composite index closed up 200.91 points, or 1.7 percent, at 11,863.50. The second straight session of solid gains took the index to its highest close since July 4. All of Canada's 10 main sectors were higher. The heavily-weighted energy group led gains, climbing as oil prices rallied on supply worries. The sharp rise added momentum to a rally that began on Friday after positive U.S. payroll data fueled broad commodity price gains. U.S. stocks rose further while Canadian exchanges were closed on Monday for a public holiday. The biggest gainers on Tuesday included Canadian Natural Resources, which added 7.3 percent to C$30, Suncor Energy, which gained 1.9 percent to C$32.23 and Cenovus Energy, which jumped 4.5 percent to C$32.79. The influential materials group, which includes miners, jumped 2.9 percent as metal prices climbed. Leading the way were top gold producers Barrick Gold , up 3.4 percent at C$33.96, and Goldcorp Inc, which climbed 2.7 percent to C$37.07. First Quantum Minerals rose 5.4 percent to C$20.01 following news the Canadian miner has partnered with a Zambian company to develop a new copper mine in central Zambia. Meanwhile, the more serious tone from European central bankers helped reassure investors, though asset managers remained cautious. "Part of this rally is predicated on central banks doing the right thing," said Elvis Picardo, vice president of research at Global Securities in Vancouver. "Whether that comes to pass is extremely difficult to say." Picardo said the next test of the Toronto market's recent rally would likely come with the release of Canadian jobs data on Friday. "It could really could go either way. If the numbers are really bad, perhaps we could see the local rally stall a little bit." Elsewhere, Air Canada ended down 0.9 percent at C$1.15. The company said passenger levels for July fell slightly from a year earlier. Meanwhile, rival WestJet Airlines said it flew fuller planes in the month. It gained 0.9 percent to C$16.16.