TORONTO - The Toronto stock market surged more than 200 points Monday in its first trading after a wild week that saw global markets plummet on downbeat predictions for the U.S. economy and a growing mess in debt-laden European countries.

The S&P/TSX composite index closed up 244.32 points to 11,707.19 following a 7.5 per cent drop last week, as financials recovered on hopes that European finance ministers would take action soon to deal decisively with the government debt crisis that has put banks on the continent under immense pressure.

Energy stocks also lifted the TSX as oil prices moved higher after demand concerns sent crude prices reeling last week, losing almost 10 per cent.

The junior TSX Venture Exchange fell 18.93 points to 1,527.15.

The Canadian dollar gained 0.11 of a cent to 97.25 cents US after plunging five cents last week.

New York markets were also up sharply after a string of selloffs as the Dow Jones industrial average jumped 272.38 points to 11,043.86. The Nasdaq composite index gained 33.46 points to 2,516.69 while the S&P 500 index rose 26.52 points to 1,162.95.

The TSX plunged to its lowest level in a year last week, while the Dow lost almost 6.5 per cent.

Traders were still cautious following word from European officials over the weekend that Germany and other rich EU countries are pushing for a new strategy to solve the debt crisis and help Greece avoid defaulting on its debt.

One proposal on the table is to ask banks and other private institutions that hold Greek bonds to take a far bigger loss on those holdings, slashing Athens' debt. Many observers have said Greece will not manage to pay down its debt even after taking into account the reduction agreed in July.

The new strategy could also see the size of the continent's euro440-billion bailout fund multiplied several times. However, analysts said more specifics will have to emerge before a rally gains traction.

"There are hopes the European Central Bank cuts interest rates and the Europeans actually do something positive instead of giving Greece more money," said Chris Kuflik, investment adviser at ScotiaMcLeod in Montreal.

"My hope is they have seen the light as their banks have been decimated in the last month."

Hopes for a resolution to Europe pushed the TSX financials sector up 3.22 per cent as Royal Bank (TSX:RY) advanced $1.89 to $47.98 and TD Bank (TSX:TD) was $2.92 higher to $73.85.

The energy component was ahead three per cent after the sector and oil prices fell about 10 per cent last week. The November crude contract on the New York Mercantile Exchange gained 39 cents to US$80.24 a barrel. Cenovus Energy (TSX:CVE) ran ahead 91 cents to $32.15 while Suncor Energy (TSX:SU) climbed $1.34 to $27.66.

Mining stocks also closed in positive territory after falling 23 per cent last week on the resource-heavy TSX amid expectations for worsening global economic conditions, which affect demand for oil and metals. Prices have also been pushed lower by a rising U.S. dollar as investors continue to shed risk and buy into the safe haven status of U.S. Treasurys.

The base metals component rose 1.49 per cent while the December copper contract on the Nymex was unchanged at US$3.28 a pound following a 16 per cent plunge last week. Teck Resources (TSX:TCK.B) rose 48 cents to $31.21 while First Quantum Minerals (TSX:FM) shot up $1.24 to $14.95.

Ivanhoe Mines (TSX:IVN) was the biggest mining decliner, down $1.51 to $15 as the miner defended the investment agreement for its Oyu Tolgoi project in Mongolia as a fair and legally binding contract. The comments from the Canadian mining company come as the Mongolian government demands a bigger stake in the massive gold and copper mine.

The gold sector was also positive even as gold prices continue to fall further with the December contract down $45 to US$1,594.80 an ounce after losing almost 10 per cent last week. Goldcorp Inc. (TSX:G) was up 73 cents to $47.68 while Barrick Gold Corp. (TSX:ABX) climbed $1.21 to $48.94.

In other corporate news, SSQ Financial Group will purchase the Canadian AXA Life Insurance operations from Intact Financial Corp. (TSX:IFC) for $300 million. The division will be renamed as SSQ Insurance Inc. and become a unit of SSQ. Intact shares were up $2.35 to $56.15.

Valeant Pharmaceuticals International Inc. (TSX:VRX) is raising its offer for Afexa Life Sciences Inc. to about $78 million or 85 cents a share in the escalating battle for the Cold-FX maker. It said that's a 20 per cent premium from its earlier offer. The announcement comes after Paladin Labs Inc. (TSX:PLB) boosted its offer for Afexa (TSX:FXA) to $74.5 million, or 81 cents per share, on Sunday. Valeant shares gained 80 cents to $40.16, Afexa shares gained 11 cents to 86 cents while Paladin shares were 61 cents higher to $37.97.

Detour Gold Corp. (TSX:DGC) said Monday it has agreed to buy Trade Winds Ventures Inc. (TSXV:TWD), its neighbour and a partner in the Detour Lake area of northeastern Ontario for $84 million in a cash-and-shares deal. Detour shares declined 85 cents to $31.17.