TORONTO - Commodity stocks helped send the TSX to its highest close of the year thanks to a weak U.S. dollar and optimism over a weekend pledge by the world's 20 biggest economies to support the global recovery with stimulus efforts.

"(The economy) is on a form of life support," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

"And I think it was reassuring that they said there is no exit any time soon, so that the worry that somehow the world economy was going to go back into some sort of dire downturn seems to be at least a bit removed now."

The S&P/TSX composite index closed up 87.83 points to 11,105.3 as the energy sector gained 2.45 per cent on higher oil prices.

The October crude contract on the New York Mercantile Exchange settled up $3.08 at US$71.10 a barrel. EnCana Corp. (TSX:ECA) climbed $1.13 to $56.98 and Suncor Inc. (TSX:SU) moved up $1.04 to C$35.04 on the TSX.

The TSX Venture Exchange climbed 11.81 points to 1,241.06.

A sharply lower U.S. dollar also gave a big lift to the Canadian dollar, off earlier highs but still up 0.62 cents to 92.64 cents U.S.

With a global economic recovery under way and signals from the weekend's meeting of G20 finance ministers that stimulus efforts will continue, "that has some people thinking, if that's going to remain in place we'll continue to see these improving economic numbers globally and (that) is bearish for other currencies," said David Watt, senior currency analyst at RBC Capital Markets.

"And that sentiment benefits the Australian dollar, the Canadian dollar, ones that are linked to commodities... and on top of that the fiscal situation in the United States -- this gives the (U.S.) dollar another leg downward."

New York markets also advanced as the Dow Jones industrial average ahead 56.07 points to 9,497.34.

The Nasdaq composite index gained 18.99 points to 2,037.77 while the S&P 500 index rose 8.99 points to 1,025.39.

Elsewhere on the TSX, the base metals sector moved ahead 2.78 per cent as December copper rose 8.95 cents to US$2.956 a pound. Teck Resources (TSX:TCK.B) gained $1.04 to C$27.54 while Equinox Minerals (TSX:EQN) improved 15 cents to $3.03.

The gold sector was down 1.22 per cent as the December bullion contract ran up $3.10 to US$999.80 an ounce, well off early highs of US$1,009.70. Barrick Gold (TSX:ABX) declined $1.05 to $42.45.

Iamgold Corp. (TSX:IMG) shares faded 50 cents to C$14.53 after it said it plans to increase gold production during the initial years of operation at its Essakane project in Burkina Faso, West Africa.

Silver Wheaton Corp. (TSX:SLW) shares gained 10 cents to $12.75 after announcing it will pay US$625 million over three years plus ongoing payments linked to market prices to buy some of the silver produced from four Barrick Gold (TSX:ABX) mines.

In economic news, contractors took out just over $4.6 billion worth of building permits in July, 11.4 per cent fewer than in June. But Statistics Canada says an important factor in the decline was the strike by civic workers in Toronto, which shut down municipal offices for most of the month.

Excluding Toronto, the total value of building permits fell by 1.8 per cent.

In other corporate news, Fairfax Financial Holdings Ltd. (TSX:FFH) is to offer nearly 2.9 million subordinate voting shares at US$347 each for gross proceeds of US$1 billion. Net proceeds will fund the proposed acquisition of the remainder of Odyssey Re Holdings Corp. that it does not currently own. Its shares declined $8.18 to C$369.75.

Shares in Telus Corp. were ahead 47 cents to C$34.90 after it announced it has acquired Black's Photo Corp. for approximately $28 million.

The Forzani Group Ltd. (TSX:FGL) plans to consolidate its two outdoor and lifestyle banners, Coast Mountain Sports and Atmosphere, to create a single national outdoor lifestyle banner under the Atmosphere name. Its shares were down 20 cents at $14.30.

Shares of Magna International Inc. (TSX:MG.A) were down $1.20 at $45.80 as General Motors Co.'s board began a two-day meeting that could see it decide the fate of its European unit Opel. Magna is one of two bidders for the operations.