Canada's main stock index rose on Monday, extending its recovery from a six-month low last week, as heavyweight financial shares rallied and after Hudson's Bay Co (HBC.TO) got a boost from an investor request that the company explore strategic options.

The Toronto Stock Exchange's S&P/TSX composite index closed up 73.5 points, or 0.48 per cent, at 15,266.04.

It follows a 1.8-per-cent drop for the index last week. On Thursday, it touched its lowest intraday since Dec. 5 at 15,077.95.

"I think we were long overdue for a rally and I think we are getting it here," said John Kinsey, portfolio manager at Caldwell Securities.

U.S. activist investor Jonathan Litt called for Hudson's Bay to consider going private and to monetize its vast real estate holdings, sending shares in the department store retailer up 15.1 per cent to $10.22.

The overall consumer discretionary group climbed 1.5 per cent, while the heavyweight financial services sector rose 0.8 per cent, led by gains for the country's major banks.

Royal Bank of Canada (RY.TO), Canada's biggest lender by assets and market value, advanced 0.8 per cent to $94.30.

Investors have been encouraged by the Bank of Canada's greater confidence in the outlook for the country's economy, Kinsey said.

The central bank's top two officials have said that rate cuts put in place in 2015 had largely done their work, and the bank would assess whether rates need to be kept at near-record lows.

The bounce for the Toronto market came as a rebound in technology stocks helped push Wall Street to record highs.

Canada's technology sector rose 2.4 per cent, led by a 4.3-per-cent advance in the shares of Shopify Inc (SHOP.TO) to $119.90.

Still, the nearly flat performance for the TSX this year compares poorly with a 9.6 percent gain for the S&P 500. Recent weakening in commodity prices has weighed on Canada's market.

U.S. crude oil futures settled 54 cents US lower at US$44.20 a barrel, while gold declined 0.8 per cent following hawkish comments from a top Federal Reserve official.

The energy group fell 0.5 percent and the materials group, which includes precious and base metals miners and fertilizer companies, gained just 0.1 per cent.

Valeant Pharmaceuticals International Inc (VRX.TO) rose 5.9 per cent to $17.79 after hedge fund manager John Paulson joined the company's board.

Shares of Bombardier (BBDb.TO) advanced 4.9 per cent to $2.59. The company said it had received seven more orders for its Q400 aircraft from Philippine Airlines.

U.S. MARKETS

U.S. stocks rose on Monday, with the S&P 500 and the Dow  hitting record highs with growth sectors such as technology in favour again as investors appeared to regain confidence in the economy after upbeat comments from Federal Reserve officials.

Nasdaq's biotechnology index rose 2.5 per cent in its biggest one-day gain since February while the S&P's health-care index had a record-high close.

Amazon.com's (AMZN.O) Friday announcement that it would buy Whole Foods (WFM.O) and an upbeat tone from Federal Reserve speakers seemed to help reassure investors after the U.S. central bank's rate hike last week, according to J. Bryant Evans, portfolio manager at Cozad Asset Management, in Champaign, Illinois.

"It looks like a bet that interest rates, such as the 10-year yield, are bottoming out," said Evans. "It's a resumption of this idea that the economy is in decent shape."

He added that a "push in M&A tends to propel the market" and that the Amazon-Whole foods US$13.7-billion deal was a "tangible sign the mergers and acquisition environment is pretty good right now."

The Dow Jones Industrial Average rose 144.71 points, or 0.68 per cent, to end at 21,528.99, the S&P 500 gained 20.31 points, or 0.83 per cent, to 2,453.46 and the Nasdaq Composite rose 87.26 points, or 1.42 per cent, to 6,239.01.

The S&P's financial sector was also one of the benchmark's strongest gainers with a 0.98-per-cent rise after New York Federal Reserve President William Dudley said U.S. inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening monetary policy.

The Fed commentary last week had surprised investors who expected more caution after some weak U.S. economic data.

"My sense is investors must be looking at this as a pro-growth belief that perhaps Dudley sees underlying strength in the economy that the data doesn't show right now. The Fed's base case is that this is just kind of a soft patch and we will continue to cycle higher," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

The S&P technology sector finished up 1.7 per cent after its second straight weekly decline, which was triggered by fears of stretched valuations. Tech stocks have led the S&P 500's 9.6-per-cent rally this year.

"Investors were temporarily chased from the space but many companies in the sector offer growth which is difficult to find in the market as a whole," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Apple (AAPL.O) rose 2.9 per cent to US$146.34, providing the biggest boost to the S&P followed by JPMorgan Chase (JPM.N), which rose 2.2 per cent to US$88.07.

The S&P 500 bank subsector rose 1.3 per cent.

The two biggest boosts for the biotechnology index were Biogen Inc (BIIB.O) and Clovis Oncology (CLVS.O)

Biogen ended up 3.5 per cent to US$260.54, after it was upgraded to "neutral" from "sell" at UBS.

Shares of Clovis Oncology soared 46.5 per cent to US$87.88 after late-stage data on its ovarian cancer drug.

Advancing issues outnumbered declining ones on the NYSE by a 1.76-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 99 new highs and 87 new lows.

About 6.3 billion shares changed hands on U.S. exchanges compared with the 6.8 billion average for the last 20 sessions.