But traders hoping to see a bottom to falling stocks and crude prices remain cautious. After an initial surge of more than 200 points, the S&P/TSX settled back to a still strong but more modest gain, up 132.87 points at 14,346.75.
The Canadian dollar was up 0.31 of a cent at 86.23 cents US.
Gains were much more impressive in New York, where markets roared ahead as traders felt more confident about the pace of future interest rate hikes by the U.S. Federal Reserve. The central bank said Wednesday that it will be "patient" in deciding when to hike rates, with chairwoman Janet Yellen adding that she foresee no increase in the first quarter of 2015.
The Dow Jones industrials jumped 421.28 points to 17,778.15, the Nasdaq gained 104.09 points to 4,748.4 and the S&P 500 index rose 48.34 points to 2,061.23.
The latest word from the Fed on rate hikes helped persuade bargain hunters to continue to snap up stocks beaten down in a recent sell-off that, at its worst earlier this week, had left the TSX less than 100 points away from where it started at the beginning of the year.
Some analysts suggested the more positive tone on markets this week is partly due to investors realizing that lower oil prices are a big positive for a largely depressed global economy.
"Six months from now, you should start to see the benefits of lower oil prices and you‘ll start to see growth pick up globally," said Norman Raschkowan, senior partner at Sage Road Advisers.
"It‘s going to be very positive for Europe, which had been skirting with deflation and concerns about falling back into recession. This should put an end to that speculation."
The energy sector was up 1.22 per cent Thursday on top of a rise of about 15 per cent over the previous two sessions as oil and gas stocks recovered from a major decline tied to a big drop in the price of crude. On Thursday, the January crude contract in New York closed down $2.36 to US$54.11 a barrel after having edged higher the previous two days. Canadian Oil Sands (TSX:COS) was ahead $1.01 or 10.37 per cent at C$10.75.
Gains also spread to other areas, such as financials, which added 0.35 per cent following an advance of about 2.5 per cent Tuesday and Wednesday. The sector had sold off on concerns about the impact of falling oil prices on the Canadian economy and the exposure of banks to high-cost producers that took on debt to finance expansion.
The gold sector climbed about 4.25 per cent Thursday as February bullion inched up 30 cents to US$1,194.80 an ounce.
March copper was off two cents at US$2.85 a pound and the base metals sector was 0.63 per cent higher.
The telecom sector was only decliner, down 0.27 per cent.
Major acquisition activity in the consumer staples space also helped lift the TSX.
Alimentation Couche-Tard Inc. (TSX:ATD.B) has a friendly deal to buy The Pantry Inc., which will add more than 1,500 locations to the Quebec-based company's U.S. network of convenience stores and fuel stops. The deal values The Pantry at US$1.7 billion, with Couche-Tard paying US$36.75 cash per share. Couche-Tard stock rose $3.67 or 8.6 per cent to C$46.21.