* TSX ends up 66.34 points, or 0.56 percent, at 11,877.72
* Index notched 2.6 pct fall for week, sharpest since May
* Financial and resource stocks lead broad upsurge
By Alastair Sharp
TORONTO, Nov 16 Canada's benchmark stock index jumped on Friday, led by financial and resource-related shares, as investors cheered conciliatory statements from U.S. politicians after they held talks on avoiding the "fiscal cliff" that threatens to drive the U.S. economy into recession.
The index had fallen in morning trade, weighed down by signs of global economic weakness, but swung higher after U.S. legislators vowed to find common ground to help the world's largest economy avoid what could be debilitating tax hikes and spending cuts.
"We've definitely seen a swing up today on more promising talk from the Democrats," said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP.
"We've seen a fairly sharp selloff in the last week or so and you're definitely starting to see a few bargain hunters come in today. As well, oil's up today so that's helping lift some of the commodity sector," Zohny said.
Oil rose as a fire on a Gulf of Mexico platform and the escalating conflict between Israel and Palestinians stoked supply concerns.
The Toronto Stock Exchange's S&P/TSX composite index closed up 66.34 points, or 0.56 percent, at 11,877.72, with broad gains across nine of its 10 main sectors. It nevertheless notched a 2.6 percent drop for the week, its sharpest weekly fall since May.
"It shows you how low our expectations are right now that you can get that kind of a rally just by coming up to a microphone and saying 'hey, we all understand each other'," said Mike Newton, portfolio manager at Macquarie Private Wealth, referring to the comments from congressional Democrats and Republicans.
"What could be exciting about it is, imagine the rally that will occur when they come out with something very concrete," he said.
STRONG RALLY POTENTIAL
Rick Hutcheon, president and chief operating officer at RKH Investments, said valuations have become so cheap that it would take little for the index to bounce higher in coming weeks.
"If there is any glimmer of good news the market has a very strong rally potential," he said, speaking before the U.S. legislators made their comments.
Royal Bank of Canada led the index's rise, adding 1 percent to C$55.62, while pipeline operator TransCanada Corp jumped 1.7 percent to C$45.05 as a bipartisan group of U.S. senators urged President Barack Obama to allow the company to proceed with the Keystone XL project.
Those companies played the biggest role of any two stocks in leading the market higher.
Miner Barrick Gold Corp gained 1.5 percent to C$33.77, while BCE Inc also moved 1.5 percent higher, to C$41.99 after confirmation that it is continuing to work with acquisition target Astral Media Inc to get a deal past regulators. Astral rose 5 percent to C$44.240
Fertilizer company Potash Corp was the most heavily weighted decliner, dropping 0.8 percent to C$37.37, while Niko Resources Ltd skidded to a 52-week low, closing down 9.3 percent at C$8.44 after the oil company announced stock and convertible debt offerings.