* TSX ends up 2.6% at 32,768.04

* For March, the index loses 4.6%

* Materials group jumps 6.1% as gold rallies

* Technology adds 4.8%

(Updates at market close)

By Fergal Smith

March 31 (Reuters) - Canada's main stock index rallied

on Tuesday by the most since April as investors welcomed signs

of potential de-escalation in the Middle East conflict, but the

index still posted its biggest monthly decline in nearly three

years.

The Toronto Stock Exchange's S&P/TSX Composite Index

ended up 833.10 points, or 2.6%, at 32,768.04,

notching its highest closing level since March 17.

For March, the index was down 4.6%, which was its biggest

monthly decline since May 2023. Still, it was up 3.3% in the

first quarter, marking the seventh straight quarterly advance.

Wall Street also surged on Tuesday after a report that U.S.

President Donald Trump had told aides he was prepared to halt

the military campaign against Iran even if the Strait of Hormuz

remained largely closed.

"We had very deep oversold conditions within

(growth-oriented) parts of the market - tied to financials,

consumer discretionary as well as industrials - that are now

showing a reasonable bounce," said Sid Mokhtari, chief market

technician for CIBC Capital Markets.

"We're still unsure whether or not this bounce can sustain

itself going forward, but it is healthy to see at least some

recovery."

The conflict has sent oil prices soaring in recent weeks,

fueling fears of global inflation that could lead to higher

interest rates than previously expected.

Domestic data was upbeat. It showed that GDP rose by 0.1% in

January on a monthly basis, eclipsing estimates for a flat

reading. An advance estimate showed the economy expanding by a

further 0.2% in February.

The materials group, which includes metal mining

shares, jumped 6.1% as gold and copper prices

climbed.

Technology added 4.8% and heavily weighted

financials ended 2.5% higher.

Suncor Energy ( SU ) said the majority of its bitumen

output by 2040 will be produced using steam-assisted extraction

technology. Its shares ended 0.1% higher.

Still, energy was the only one of ten major sectors to

lose ground, falling 0.6% as the price of oil settled

1.5% lower at $101.38 a barrel. For March, energy added nearly

15%.