After recording its biggest drop in eight weeks the previous session, the market recovered to post its sharpest gain in more than 1-1/2 weeks.

A drop in the U.S. dollar lifted bullion prices and pushed gold-mining shares up 3.8 percent.

The Toronto stock market's benchmark index, which has outperformed the S&P 500 <.SPX> in August to date, had a stronger gain than its U.S. counterpart on Tuesday. <.N>

Investors trained their focus on the release on Wednesday of minutes from the Fed's last policy meeting, which they will scan for clues on when the U.S. central bank is likely to begin trimming its stimulative bond purchases.

"Nobody wants the party to end," said Marcus Xu, portfolio manager at MY Capital Management Corp in Vancouver.

"Investors want to find out what the scale of the taper is going to be, if there's going to be any surprises," he added. "The Fed is probably going to be a little dovish, given the economic growth is not significantly stronger than before yet."

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed up 82.09 points, or 0.65 percent, at 12,670.11.

"The Fed tapering is a foregone conclusion," said Philip Petursson, managing director, portfolio advisory group, at Manulife Asset Management.

Investors want details about how rapidly the Fed will move, added Petursson, who expects a rollback of the stimulus program to have a negative impact on the Canadian market.

In Tuesday's trading, six of the 10 main sectors in the index were higher.

Financials, the index's most heavily weighted sector, climbed 0.6 percent. Royal Bank of Canada (>> Royal Bank of Canada), the country's biggest lender, added 1 percent to C$64.67 and had the biggest positive influence on the index. Toronto-Dominion Bank (>> Toronto-Dominion Bank) rose 0.8 percent to C$87.56.

The materials sector, which includes mining stocks, advanced 2.2 percent, aided by the gains in gold producers. Goldcorp Inc (>> Goldcorp Inc.) rose 2.9 percent to C$32.89, and Barrick Gold Corp (>> Barrick Gold Corp.) was up 3.3 percent at C$20.60.

Despite lower U.S. crude oil prices, shares of energy companies climbed 0.3 percent. In the group, Canadian Natural Resources Ltd (>> Canadian Natural Resources Limited) was up 1 percent, at C$30.96.

In other news, shares of Nordion Inc (>> Nordion Inc) jumped 7.5 percent to C$8.28 after the medical isotope provider said it settled a lawsuit with its main supplier, Atomic Energy of Canada Ltd, and would receive a settlement.

(Editing by Cynthia Osterman)

By John Tilak