TORONTO (Reuters) - Canadian stocks recovered from a one-week low to end higher on Wednesday, led by financial shares on expectations of healthy bank earnings and by Inmet Mining Corp (Toronto:IMN.TO - News), which jumped 18 percent after it turned down a hostile takeover bid.

The base metals miner, which turned down the unsolicited offer from larger competitor First Quantum Minerals (Toronto:FM.TO - News), whose shares were down 1.6 percent, also said it had adopted a shareholder rights plan, which will allow it time to consider other bids or to seek alternatives to a takeover.

"I think, hopefully, Inmet shareholders will see some of the big boys come in and look to top the bid. We'll see," said Barry Schwartz, portfolio manager at Baskin Financial Services, who owns Inmet stock.

The late-day rebound on the index also followed comments from a top Republican that fueled hopes for a U.S. budget deal that would avert the "fiscal cliff" of tax hikes and spending cuts that threatens to drag the United States back into recession.

U.S. House of Representative Speaker John Boehner said Republicans were willing to put revenues on the table to get a U.S. fiscal deal if Democrats agreed to spending cuts. President Barack Obama, speaking later in the day, said he hoped to get a deal done in the next four weeks.

"The market is fixated on the perception of which way the talks on the fiscal cliff are going. That's the single biggest driver," said Elvis Picardo, strategist and vice president of research at Global Securities.

"The underlying tone of the market is positive. There is hope that some resolution will be achieved. Barring any macroeconomic shocks, we're looking for a positive close for the end of the year," Picardo said of the outlook for the TSX.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended up 28.70 points, or 0.24 percent, at 12,140.33. The TSX is up about 1.5 percent since the start of the year.

The financial sector, the biggest on the index, advanced 0.4 percent. Royal Bank of Canada (Toronto:RY.TO - News), which will kick off the quarterly earnings season for Canadian banks on Thursday, gained 0.6 percent at C$58.35.

"The bank earnings should be a big mover for the TSX. If they come in pretty strong, that could be just the catalyst that the TSX needed to get going," Picardo said.

In early dealings, Toronto's main stock index hit a one-week low of 12,004.49, its lowest point since November 20, led down by mining and energy stocks as doubts over the resolution of the U.S. fiscal crisis hurt investor sentiment and pulled commodity prices lower.

"Investors are looking for a statement of how the United States really plans to resolve this problem. So far there doesn't seem to be a plan," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

Material and energy stocks, which make up more than half the index's weight, rebounded from the weak start, rising 0.5 percent and 0.4 percent respectively. Natural gas producer EnCana Corp (Toronto:ECA.TO - News) was the biggest heavyweight gainer, jumping 3.2 percent to C$21.65.

Other big movers included Research In Motion Ltd (Toronto:RIM.TO - News), up nearly 3 percent to C$11.00 as investors focused on a move by a U.S. fund manager to expand its holding in the smartphone maker ahead of next year's launch of RIM's make-or-break BlackBerry 10 line.

SNC-Lavalin Group (Toronto:SNC.TO - News) lost 2.3 percent to C$39.99 after the Quebec-based engineering and construction company's former chief executive was arrested on three fraud-related charges, adding to a series of allegations about the company's ethics.

Canadian Tire Corp Ltd (Toronto:CTC.TO - News) agreed to buy closely held hockey chain Pro Hockey Life Sporting Goods Inc for C$85 million. Its shares were down 0.9 percent at C$75.50. ID:nL1E8MS3HD]

($1-$0.99 Canadian)

(Additional reporting by John Tilak; Editing by Peter Galloway)