The S&P/TSX composite index ended the session up 121.21 points at 14,753.65, helped in particular by climbing gold and metals and mining stocks.
But the optimism in equities didn't translate to the Canadian dollar. The loonie plunged 1.18 cents to 85.02 cents US in the face of a strengthening U.S. greenback and generally weak crude oil prices.
The last time the currency closed this low was May 15, 2009, when it finished at 84.81 cents US.
Meanwhile, New York indexes were essentially flat after surging at the open. The Dow Jones industrials gained 9.92 points to 17,832.99, while the Nasdaq was down 9.24 points at 4,726.81. The S&P 500 index pulled back 0.7 of a point to 2,058.20.
The U.S. markets fell after the release of slightly disappointing economic data.
The Institute for Supply Management reported that U.S. factory activity grew at the slowest pace in six months in December, weakened by declines in orders and production. The trade group of purchasing managers said its manufacturing index fell to 55.5 in December from 58.7 in November. A figure of 50 or above still indicates expansion.
Also, the U.S. Commerce Department reported that a sharp slowdown in government-built schools and infrastructure caused U.S. construction spending to fall slightly in November. It said construction spending slipped 0.3 per cent in November, after having climbed 1.2 per cent in October.
In Canada, the latest economic gauge also showed that manufacturing also moderated in December.
The RBC Canadian purchasing managers index slipped to 53.9 last month from 55.3 in November and October. A reading of 50 or above on the index also indicates expansion.
In commodities, oil prices continued to slide towards fresh five-year lows as the February crude contract on the New York Mercantile Exchange lost 58 cents to US$52.69 a barrel.
Paul Vaillancourt, executive vice-president of private wealth at Fiera Capital, said investors may finally be looking at the bigger picture when it comes to lower oil prices.
"Sometimes a little bit of time allows for a different perspective," Vaillancourt said from Calgary.
"That perspective is that lower energy prices isn't the end of the world. It's positive for a great number of economies for the world, so investors are shaking (off) the doom and gloom and starting the year fresh with a brighter perspective."
February gold rose $2.10 to US$1,186.20 an ounce as the TSX gold sector came out as the day's biggest gainer, up 3.76 per cent.
March copper dipped a penny to US$2.82 a pound, while the metals and mining sector on the TSX climbed 3.39 per cent.
In corporate news, Ballard Power Systems (TSX:BLD) says it won't achieve its guidance for 2014 revenue and adjusted earnings due to alleged contract breaches by Azure Hydrogen, which was licensed to assemble Ballard products for the Chinese market.
Ballard says it won't recognize any of the $3 million in revenue that it had expected to book from Azure in the fourth quarter and will record an impairment charge of $4.5 million from outstanding receivables owed by Azure. Its shares fell more than nine per cent or 22 cents to $2.15 on the Toronto Stock Exchange.
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