TORONTO - The Toronto stock market surged about 1.5 per cent Tuesday with a big chunk of the advance coming from a leap in the value of PotashCorp shares after the fertilizer giant rejected a hostile US$38.6-billion takeover bid from Australia's BHP Billiton Ltd.

The S&P/TSX composite index jumped 175.88 points to 11,728.64, with added lift coming from bullish earnings and economic data from the United States.

PotashCorp (TSX:POT) said the offer, worth US$130 per share in cash, was "grossly inadequate" and not in the best interests of its shareholders.

John Stephenson, portfolio manager at First Asset Funds, said the bid by the Australian resources giant reflected the fact that PotashCorp stock has retreated from its roughly $200 per share level a year and a half ago.

"Given that commodities are taking a bit of a breather right now, this is opportunistic on the part of BHP," Stephenson said, adding that "you can absolutely count on Potash to fight this tooth and nail."

Potash shares advanced $30.11, or 25.68 per cent, to $147.34 on the TSX and were up $30.97 at US$143.12 in New York.

The Potash move accounted for well over a third of the TSX advance as the company is the sixth most heavily weighted on TSX, with a 3.25 per cent weighting on the main index. Royal Bank is the most heavily weighted TSX stock.

Rival potash producer Agrium (TSX:AGU) was up $2.38 at $71.19 on the Toronto market.

The TSX base metals sector climbed 4.58 per cent as investors hoped that other offers would be forthcoming for other resource companies. Taseko Mines (TSX:TKO) rose 25 cents to $4.59 and Quadra FNX Mining (TSX:QUX) was ahead 75 cents at $11.02.

Copper prices also helped boost the sector with the September copper contract on the Nymex ahead six cents at US$3.34 a pound. Teck Resources (TSX:TCK.B) ran ahead $2.10 to C$35.92.

And the potential for other large takeovers also helped push the Canadian dollar up 1.08 cents to 96.81 cents US.

The TSX Venture Exchange rose 6.44 points to 1,463.6.

The energy group was ahead 1.34 per cent as oil prices edged up for the first time in five days Tuesday with the September contract on the New York Mercantile Exchange up 53 cents at US$75.77 a barrel. Canadian Natural Resources (TSX:CNQ) climbed 84 cents to C$34.74, while Suncor Energy (TSX:SU) gained 38 cents to C$33.49.

Oil has dropped from above US$81 a barrel early last week amid resurgent fears that the world economy may not grow as much as expected in the second half.

The tech sector led declines as Research In Motion Ltd. (TSX:RIM) shares fell another $1.12, or 2.11 per cent, to $51.90. On Monday, there were reports out of India that RIM had agreed to provide that country's security agencies with partial access to its BlackBerry instant messaging services by Sept. 1.

A number of countries -- including India, Saudi Arabia and the United Arab Emirates -- have threatened to cut off BlackBerry services unless they get greater access to user data. Its stock is down sharply from the $59.12 level where it started the month.

The gold sector was little changed as December gold in New York was up $2.10 at US$1,228.30 an ounce. U.S. markets were higher following better than expected earnings from retail bellwethers Walmart Stores and Home Depot. Data showing industrial production rose in July on the strength of U.S. manufacturing also boosted confidence. The Federal Reserve reported that output at U.S. factories, mines and utilities increased one per cent last month.

The Dow Jones industrial average rose 103.84 points to 10,405.85.

The Nasdaq composite index was ahead 27.57 points at 2,209.44 while the S&P 500 index advanced 13.16 points to 1,092.54.

Modest sales increases helped boost Home Depot Inc.'s second-quarter net income seven per cent to US$1.19 billion or 72 cents a share, a penny better than analysts had expected. Its shares climbed 93 cents to US$28.31.

And Walmart reported a 3.6 per cent increase in second-quarter net income to US$3.59 billion or 97 cents a share, better than the 96 cents a share that analysts had forecast. Its shares rose 62 cents to US$51.03.

In other economic news, Canadian manufacturing sales edged up 0.1 per cent in June to $44.8 billion, which was much better than the 0.5 per cent decline that economists expected.

Gains were led by a 0.6 per cent rise in the durables component, led largely by increases in the furniture and fabricated metal products and in computers and electronics. Motor vehicle sales were flat in June following a 4.4 per cent gain in May.

Elsewhere on the corporate front, Magna International Inc. (TSX:MG.A) shares gained $3.93 to $83.57 after it said the Ontario Superior Court approved its plan to eliminate the company's dual-class share structure. Opponents of the plan have said it pays Magna founder Frank Stronach too much for giving up his family's voting control through their multiple-vote shares.