But the TSX closed below its best levels of the session as worries about the future of the eurozone eroded gains in mining and energy stocks late in the session.
The Toronto stock market came down from a 254-point surge to close up 171.15 points to 11,451.78 as traders caught up to solid advances made on global commodity and stock markets while the TSX was closed for Victoria Day.
Investors had appeared ready to shop for stocks beaten down over three weeks of sharp declines that took the TSX down to the levels of last October, largely because of worries about whether Greece will have to leave the monetary union.
The TSX Venture Exchange was up 18.87 points at 1,246.75.
"There are still opportunities for investors to be putting money to work in today's market," said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis, Mo.
"But there's no question that in the interim, the lack of (positive) developments out of Europe are really going to have some sort of a grip on the markets day to day."
The Canadian dollar also gave up early gains as the U.S. currency strengthened and early gains in commodities evaporated, closing down 0.09 of a cent to 97.87 cents US.
New York markets also lost early traction that came from a report that existing home sales rose 3.4 per cent last month to a seasonally adjusted annual rate of 4.62 million, which met economists’ expectations.
The Dow Jones industrial average dipped 1.67 points at 12,502.81. The Nasdaq composite index was 8.13 points lower to 2,839.08 and the S&P 500 index inched up 0.64 of a point to 1,316.63.
Commodity prices headed lower after closing at multi-month lows last week on demand worries and a strengthening U.S. dollar. Traders have avoided riskier investments such as commodities, equities and resource-based currencies such as the Canadian dollar and bought into the safe haven of U.S. Treasuries.
The worry is that Greek political parties dead set against the austerity programs that have made crucial bailouts possible will be in an influential position after the next election June 17. A repudiation of those agreements would likely trigger a default and Greece would have to exit the eurozone.
A stronger greenback usually helps depress oil prices, which are denominated in U.S. dollars, as it makes oil more expensive for holders of other currencies.
The June crude contract on the New York Mercantile Exchange was off 91 cents at US$91.66 a barrel, wiping out most of Monday's $1.09 gain. The energy sector gained 2.46 per cent while Canadian Natural Resources (TSX:CNQ) was up $1.05 to C$31.
The base metals sector ran ahead 2.3 per cent while copper was off a cent at US$3.49 a pound following a three-cent rise Monday. Ivanhoe Mines (TSX:IVN) gained 60 cents to C$9.36.
June gold was off $12.10 to US$1,576.60 an ounce after dipping $3.20. The gold sector was up about two per cent and Barrick Gold Corp. (TSX:ABX) advanced 58 cents to C$38.45.
The financial sector gained almost one per cent ahead of earnings reports from the big banks which are expected to show some softening from the last quarter.
"Our view of the financial sector has been more neutral of late," added Fehr.
"We think that the banks themselves are fantastic operators. But our view is that the real bastion of profitability for them, which is domestic residential lending and personal loan growth, is an area that is poised to slow."
Royal Bank gained 47 cents to $52.17 and Bank of Montreal (TSX:BMO) climbed 22 cents to $55.25. BMO hands in earnings Wednesday while TD Bank (TSX:TD) and Royal Bank (TSX:RY) report the following day. Scotiabank (TSX:BNS) will deliver its earnings report May 29, with National Bank and CIBC (TSX:CM) following up May 30.
Meanwhile, traders also digested a dire warning from the Organization for Economic Co-operation and Development that the 17-country eurozone risks falling into a "severe recession."
And the OECD, which comprises the world’s most developed economies, called on governments and Europe’s central bank to act quickly to stop the slowdown spilling over into the global economy.
OECD Chief Economist Pier Carlo Padoan called on eurozone leaders to adopt a "policy compact" to promote growth even while reducing deficits.
In corporate news, social media site Facebook continued to see its share price retreat after making its debut Friday at US$38. It was down $3.03 or 8.9 per cent from Monday to US$31. It closed Friday at $38.23.
Best Buy Co. said Tuesday that its fiscal first-quarter profit dropped 26 per cent to US$158 million, or 46 cents per share. Excluding restructuring charges, earnings were 72 cents per share against the 59 cents that analysts expected. Revenue rose two per cent to $11.61 billion, aided by an extra week, and its shares rose 29 cents to US$18.46.
Shares in Canadian Pacific Railway (TSX:CP) gained 81 cents to $74.92 as union leaders representing 5,000 CP workers met with the federal labour minister as a possible strike looms early Wednesday morning. Douglas Finnson, vice-president of the Teamsters Canada Rail Conference, described the meeting with Labour Minister Lisa Raitt as very positive and says talks are ongoing.
Air Canada's mechanics and baggage handlers are joining the airline’s pilots in moving to arbitration to resolve their outstanding labour dispute after talks failed to reach a new contract. A similar process to resolve the dispute with the airline’s 3,000 pilots was announced on Saturday. Air Canada (TSX:AC.B) shares were a penny higher to 85 cents.