CANADA STOCKS-TSX rides commodities to higher close

* TSX rebound follows 3 percent fall in Monday's session

* Key Toronto index now down 0.3 percent in January

* Rally driven by gains across all 10 sectors (Adds details, and comments)

By Frank Pingue

TORONTO, Jan 13 (Reuters) - Toronto's main stock index closed sharply higher on Tuesday as investors raced back into equities after a string of selloffs had left the TSX at its lowest level in two weeks.

The heavyweight materials sector, which had spearheaded the index's steep slide in the previous session, rebounded to lead Tuesday's rally. The energy group, led by a 2.2 percent gain in EnCana Corp (ECA.TO) to C$56.08, also fueled the gain.

Toronto's key index tumbled more than 3 percent on Monday to erase all of the gains it had made since the start of the year. Last week it was up 5.76 percent for the year.

"Energy and commodity stocks did quite well and that's helped prop up the market," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"So money is starting to come back to energy and materials because stocks in those sectors were hurt disproportionately during the market meltdown."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE rallied 168.22 points, or 1.91 percent, to close at 8,961.55. That was 24 points off the session high of 8,986.15 the index reached shortly after midday.

A big boost came from the materials group as the same big-name gold mining shares that led recent declines rebounded as investors felt the downward moves were overdone.

The materials group, which accounts for about 20 percent of the overall Toronto index, led all sectors with a gain of 3.91 percent. The energy group followed with a 2.67 percent gain.

Shares of Barrick Gold Corp (ABX.TO), the biggest contributor to the index's gain, rose 5 percent to C$39.98, while Goldcorp (G.TO) shares jumped 3.65 percent to C$31.49.

Yamana Gold (YRI.TO), which said it is back in the hunt for acquisitions, also chipped in as its shares rallied 2.4 percent to C$7.95.

"NEEDED A BOUNCE"

Higher oil prices supported energy companies, whose shares were battered last year when slumping fuel demand due to the global slowdown sent oil prices down 54 percent from their record high of $147.27 a barrel last July.