TORONTO - The Toronto stock market moved higher Wednesday afternoon as traders looked for more clarity on Greece's plan to put its bailout plan to a referendum and took in some reassuring words on the economy from the U.S. Federal Reserve.

The S&P/TSX composite index was off session highs but still up 126.24 points to 12,241.34, in a broad-based recovery a day after being rattled, along with most major world markets, by the referendum announcement.

The TSX Venture Exchange gained 28.77 points to 1,617.65.

"The truth is that when people came in this morning, they saw that Europe was hanging in there, the European markets were by and large higher," said Norman Raschkowan, North American strategist for Mackenzie Financial Corp.

"People took some comfort from the fact that Europe has calmed down a bit, so that set sort of a positive tone for the session."

The U.S. Federal Reserve announced at the end of a two-day meeting that it would continue to hold the line on interest rates near zero. But the Fed also is holding off on any new actions to help the economy because stronger growth is giving it time to gauge the impact of steps it's already taken.

Fed policy-makers said the U.S. economy has strengthened and consumers have stepped up spending. But they said the economy continues to face significant downside risks, including strain in global financial markets -- a reference to the crisis in Europe.

The Canadian dollar moved up 0.66 of a cent to 98.81 cents US. The loonie had plunged more than two cents Tuesday after the surprise announcement by Prime Minister George Papandreou sent traders to the safe haven of the U.S. dollar.

New York markets were positive as the Dow Jones industrial index gained 159.61 points to 11,817.57. The Nasdaq composite index ran up 25.06 points to 2,632.02 while the S&P 500 index was up 16.49 points to 1,234.77.

Papandreou's unexpected call for a public vote on the aid package came just days before the leaders of the world's largest industrial and developing nations gather for the G20 economic summit in Cannes, France on Thursday and Friday. Investors worry Greeks are fed up following a string of painful tax increases and drastic government spending cuts and will vote against an economic austerity plan, which could in turn result in havoc in the region's financial sector and even tend to push the global economy back into recession.

The announcement also came just five days after European officials outlined a plan to deal with the fact that Greece cannot pay its debts on time. The three-pronged strategy involved boosting a bailout fund, getting private creditors to take a bigger hit on their Greek debt holdings and forcing banks to raise more capital. Market optimism about the plan had already started to wear thin Monday as analysts looked for more specific details on how the plan would work.

"The only reasonable explanation for this referendum out of the blue is, since the details of what Greece would have to abide by haven't been set yet, he's hoping that this way Europe gives him a bit of a break," added Raschkowan.

Papandreou also has to survive a confidence motion on Friday and analysts say that is by no means guaranteed. A revolt in George Papandreou's government could scuttle the Greek referendum, which would be an enormous relief to investors.

The weaker U.S. dollar helped commodity prices claw back losses from the previous session. A weaker greenback usually helps lift commodity prices, which are denominated in U.S. dollars, as it makes oil and metals more attractive to holders of other currencies.

The TSX energy sector gained 1.53 per cent as the December crude contract on the New York Mercantile Exchange gained 76 cents to US$92.95 a barrel. Suncor Energy (TSX:SU) gained 61 cents to C$31.53 while Cenovus Energy (TSX:CVE) climbed 59 cents to $34.04.

Metal prices advanced as the December copper contract on the Nymex gained eight cents to US$3.58 a pound, pushing the mining sector up 2.6 per cent. Teck Resources (TSX:TCK.B) advanced 74 cents to C$38.83 and First Quantum Minerals (TSX:FM) rose $1.09 to $20.82.

The gold sector rose 1.17 per cent per cent as bullion moved higher while the December gold contract in New York rose $27.20 to US$1,739 an ounce. Barrick Gold Corp. (TSX:ABX) rose $1.15 to C$51.45 and Goldcorp Inc. (TSX:G) climbed $1.25 to $51.20.

The financial sector also lifted the Toronto market, up one per cent with Manulife Financial (TSX:MFC) ahead 16 cents to $12.58 and Scotiabank (TSX:BNS) gained 98 cents to $52.05.

European markets were higher after steep losses Tuesday with London's FTSE 100 index ahead 1.25 per cent, Frankfurt's DAX was ahead 2.25 per cent and the Paris CAC 40 climbed 1.38 per cent.

Markets were also supported in part by encouraging labour news two days before the release of the U.S. non-farm payrolls report for October. Automatic Data Processing said that company payrolls rose by 110,000 in October. Most of the gains came from the service industry. ADP also revised higher its survey results for September.

In earnings news, Talisman Energy Inc. (TSX:TLM) shares gained 47 cents to $14.24 as it reported that its net income jumped by nearly half in the latest quarter to $521 million as the company generated from higher prices and output. Revenues rose 17 per cent to nearly $1.95 billion.

Shares in Canada's fourth-largest insurer, Industrial Alliance Insurance and Financial Services Inc. (TSX:IAG) fell $2.98 or 9.23 per cent to $29.30. The company saw its profits take a 28 per cent battering in the third quarter as financial market turbulence and low interest rates combined to hamper profitability at its individual insurance and wealth management businesses

Toy maker Mega Brands (TSX:MB) saw its profits dip slightly in the third quarter on higher costs. The Montreal-based company said net earnings fell to US$17.1 million compared to $17.4 million a year earlier. Sales rose to $133.4 million from $128.3 million. Its shares were 30 cents higher at $8.80.

Canadian-American beer producer Molson Coors (TSX:TAP) (NYSE:TAP) said third-quarter net income tumbled 23 per cent to US$197.4 million because of higher costs, the poor economy in the United States and surprisingly weak sales in the U.K. Its shares were down $1.05 to US$39.28 in New York.