By Leah Schnurr

TORONTO, May 2 (Reuters) - A recent surge in confidence has put the Toronto stock market into make-or-break territory, analysts say, and if the market's main index can hold on to its gains, it could have a shot at retesting record highs.

With the emergence of a more positive tone after months of volatility, the S&P/TSX composite index .GSPTSE has been dancing around the 14,000-mark in recent weeks, closing above that threshold for the first time since early November.

Market watchers have taken the rally as a sign of deepening strength in Canada's senior equities market.

"We appear to have broken through that 14,000 barrier and that's very, very important," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary. "So, if we can hold this, that's a very positive sign for the market."

The composite gained more than 4 percent through April, as investors started to hope that the worst of the credit crunch behind them and that financial institutions were getting closer to cleaning up their balance sheets.

At the end of the month, the benchmark shot as high as 14,372.31, less than 300 points away from the record high reached in July of last year. On Friday it jumped 214 points, or 1.5 percent, to end the week at 14,280.28.

The momentum in the first two days of May was heartened by the suggestion that the U.S. Federal Reserve could take a breather in what has been an aggressive campaign of interest rate cuts in an attempt to bolster a flailing U.S. economy.

Analysts say the market has taken this as a signal that economic problems south of the border are stabilizing. Worries over the health of Canada's largest trading partner, as well as fears over further fallout from the credit crunch, have been major weights on stock markets around the world.