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CANADA STOCKS-TSX rallies as investors see recent volatility as overdone

(Adds investor quotes and details throughout; updates prices)

* TSX ends up 227.83 points, or 1.1%, at 20,861.10

* All 11 of the Toronto market's main groups end higher

* Energy gains 1.7%; consumer cyclicals end 2.1% higher

* Dye & Durham Ltd jumps 9.3% after making acquisition

By Fergal Smith

TORONTO, Dec 6 (Reuters) - Canada's main stock index rose on Monday as investors took the view that the recent selloff driven by worries about the new Omicron coronavirus variant and potentially tighter monetary policy went too far.

The Toronto Stock Exchange's S&P/TSX composite index ended up 227.83 points, or 1.1%, at 20,861.10. It fell 2.3% last week, its biggest weekly decline since January.

"I think people woke up over the weekend and said the volatility of last week was perhaps overdone," said Philip Petursson, chief investment strategist at IG Wealth Management.

"It's not just limited to what's going on in Toronto, it's also going on in the United States."

Wall Street's major averages closed higher with economically sensitive sectors and travel-related stocks soaring as investors were encouraged by some optimistic comments from a top U.S. official on the new variant.

All 11 of the Toronto market's main sectors gained ground, including a 1.7% advance for energy as oil prices rallied. U.S. crude oil futures settled 4.9% higher at $69.49 a barrel.

Consumer cyclical shares rose 2.1%, while the technology group ended 1% higher.

It was led by a 9.3% jump in the shares of Dye & Durham Ltd after the cloud-based software company said it has acquired Telus Corp's financial solutions business.

"Markets are probably going to be volatile until we get through the Federal Reserve meeting," said Gregory Taylor, a portfolio manager at Purpose Investments.

U.S. Federal Reserve policymakers meet next week and will consider speeding the reduction of their bond-buying program, which currently is on track to end by June 2022.

The Bank of Canada is due to make a policy decision on Wednesday. (Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Sandra Maler)