* TSX ends up 269.97 points, or 2.24 pct, at 12,338.33
* Nine of 10 sectors stronger, gold miners sink 4 pct (Updates with details, comments)
By Claire Sibonney
TORONTO, Aug 23 (Reuters) - Toronto's main stock index posted its biggest gain in nearly two weeks on Tuesday as resource issues rose with commodity prices and financial issues jumped on surprisingly strong Bank of Montreal earnings.
Canadian investors also took a cue from U.S. markets, where many players jumped back into stocks before a highly anticipated speech by U.S. Federal Reserve Chairman Ben Bernanke later in the week, which could signal more stimulus for the economy.
Energy and financial issues powered the TSX's gains as oil rose on increased risk appetite and continued fighting in Libya, while the first of a wave of Canadian bank earnings due over the next two weeks beat estimates. [O/R]
Among the most heavily weighted gainers, Canadian Natural Resources CNQ.TO surged 6 percent to C$34.88, while Bank of Montreal BMO.TO jumped 4.3 percent to C$59.80 after it reported 18 percent profit growth due to stronger capital markets revenue and a recent acquisition. [ID:nN1E77L0PK]
"Investors are just desperate for some good news out there and they've been buffeted by the volatilities from the political inertia both in Europe and the U.S. to deal with some of these problems," said Michael Sprung, president at Sprung & Co Investment Counsel.
He noted that data out of China on Tuesday showing manufacturing growth was slowing only slightly was positive for the outlook on commodities, lifting copper prices in particular. [MET/L]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 269.97 points, or 2.24 percent, at 12,338.3, its strongest one-day rally since Aug. 10. Nine of the 10 main groups were firmer, as materials were dragged down by sliding gold miners.
The biggest heavyweight gainer on the index was Potash Corp POT.TO, which climbed 6.1 percent to C$53.81 after it was upgraded to "outperform" from "sector perform" by Scotia Capital.[ID:nWNAB1801]
Holding back the day's big gains, precious-metal stocks plunged almost 4 percent as the price of gold tumbled from its first ever foray above $1,900 an ounce in the sharpest one-day drop in 18 months. [GOL/]
Goldcorp Inc G.TO sank 5.3 percent to C$50.79, while Barrick Gold ABX.TO dropped nearly 3 percent to C$50.10.
While market players were focused on Bernanke's speech at the annual central bank conference in Jackson Hole, Wyoming, on Friday, they were careful in their predictions about what he would say, shying away from suggestions that he would launch another round of Fed quantitative easing.
"I would suggest that (the Fed) is going to be very careful not to say things that could further disrupt the markets," Sprung said, adding that he expects the recent spate of market swings to prevail for some time.
Bruce Latimer, a trader at Dundee Securities, said BMO's results were a positive start to the bank earnings season, but cautioned that investors in general are still very wary.
"We're in that sort of odd trading scenario - whether it's every year or every two to three years - where investors have been sticking their toe in the water and getting their ankle bit off. And after a while they just stop doing that," he said.
($1=$0.99 Canadian) (Reporting by Claire Sibonney; editing by Peter Galloway)