* TSX up 0.52 percent at 12,742.66
* All 10 main sectors contribute to gains
* Ottawa's decision on BHP-Potash deal in focus (Adds details)
TORONTO, Nov 1 (Reuters) - Toronto's main stock index climbed to its highest in more than two years on Monday, led by gains in energy issues, as the price of oil rose following strong Chinese manufacturing data.
The resource-heavy index TSX benefited from rallying oil prices as data showed Chinese manufacturing expanded in October at the fastest pace in six months, sending the energy group up 1.16 percent. [ID:nTOE6A001P]
The U.S. dollar also weakened on expectations the Federal Reserve will unveil further monetary easing through bond purchases this week. [FRX/]
Strong advancers included Suncor Energy SU.TO, up 2.26 percent to C$33.42, while Canadian Natural Resources CNQ.TO gained 1.2 percent to C$37.56. Teck Resources TCKb.TO added 0.6 percent to C$45.88, and Cameco CCO.TO rose 2.16 percent to C$32.23.
Gold-mining shares dented the material group's gain of 0.02 percent, as the price of bullion retreated. Key decliners included Goldcorp G.TO, down 1.23 percent at C$44.98, while Barrick Gold ABX.TO fell 1 percent to C$48.61.
At 10:20 a.m. (1420 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 66.42 points, or 0.52 percent, at 12,742.66. Earlier, it reached 12,759.06, its highest level since Sept. 22, 2008, and held as data showed U.S. manufacturing growth picked up in October. [ID:nN01133614]
All 10 main groups contributed to the upside.
"It is a fairly strong start going into the week, considering the amount of stuff that has to go under the bridge this week," said Michael Sprung, president of Sprung & Co. Investment Counsel, pointing to a raft of economic data, U.S. midterm elections, and the Fed's monetary policy decision.
Potash Corp POT.TO was almost unchanged at C$147.61 as investors awaited the Canadian government's ruling on BHP Billiton's $39 billion hostile takeover bid for the fertilizer giant. Ottawa has said it would meet a deadline of midnight on Nov. 3.
Britain's Sunday Times said BHP plans to raise its $130 per share bid, citing sources close to the situation. However, the paper reported one source said BHP was focused on clearing regulatory hurdles, including winning approval from the Canadian government, before it does anything else. [ID:nLDE6A00HD]
"The market is certainly anticipating a sweetened bid. If the government were to approve it at $130, the shareholders still have an opportunity to say 'no' themselves," said Sprung.
($1=$1.01 Canadian) (Reporting by Ka Yan Ng; editing by Rob Wilson)