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By Leah Schnurr
TORONTO, May 1 (Reuters) - The Toronto Stock Exchange's main index charged higher on Thursday, helped by an afternoon rally in financials amid further optimism that the worst of the credit troubles has already passed.
The positive tone eclipsed a selloff in commodities, which had dragged the resource-heavy Toronto benchmark lower earlier in the day.
Canadian Imperial Bank of Commerce (CM.TO) rose C$2.58, or 3.5 percent, to C$76.75, and Toronto-Dominion Bank (TD.TO) added C$2.00, or 3 percent, to C$68.11, as the sector overall pushed up 2.2 percent.
Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary, said investors were taking confidence from the U.S. Federal Reserve's suggestion on Wednesday that it could pause in its aggressive campaign of interest rate cuts.
"I think the message the market can glean from that is that the Fed feels that the risks to growth have abated enough, so the market's starting to take a more positive look of later in the year," he said.
The S&P/TSX composite index .GSPTSE closed up 128.77 points, or 0.92 percent, at 14,065.81 after hitting a session low of 13,846.57.
Autoparts maker Magna International MGa.TO also propped the index up after it reported first-quarter profit that beat analysts' expectations and upped its sales outlook for the year. Shares of Magna surged C$5.85, or 7.9 percent, to C$80.10.
Loblaw Cos (L.TO) advanced C$1.34, or 4.2 percent, to C$33.17 a day after it reported higher earnings. Shares of George Weston (WN.TO), which is the majority owner of Loblaw, gained C$2.45, or 5.1 percent, to C$50.95, and helped propel the consumer staples group up 3 percent.
"I think what impressed people was the underlying improvement in the ongoing operating earnings, and I think when people have begun to distill the numbers, they're seeing some light ahead," said Michael Sprung, president at Sprung & Co. Investment Counsel, of Loblaw's results.
"It might be a long way off still, but certainly the company has been selling at such a severe discount that we're beginning to see a few believers."
Shares of Research In Motion RIM.TO climbed C$8.05, or 6.6 percent, to C$130.64 amid rumors that the company will launch a flip-phone version of its BlackBerry smartphone. The tech sector added 2.8 percent.
The energy and materials groups remained the two sectors on the downside, falling 1.2 percent and 0.1 percent respectively as weaker commodity prices weighed.
Imperial Oil (IMO.TO) slid C$1.14, or 1.9 percent, to C$58.28 after it said first-quarter profit dropped amid weak refining results and plant outages.
SNC-Lavalin Group SNC.TO and Stantec (STN.TO) advanced after both companies reported better first-quarter profits. SNC was up C$1.49, or 3 percent, at C$52.00, and Stantec rose C$1.43, or 4.8 percent, to C$31.06.
Market volume was 392 million shares worth C$7.6 billion. Advancers outpaced decliners 847 to 724. The blue chip S&P/TSX 60 index .TSE60 closed up 7.60 points, or 0.92 percent, at 833.51.
In New York, stocks rose while a rebound in the U.S. dollar and easing oil prices soothed worries about inflation. The Dow Jones industrial average .DJI shot up 189.87 points, or 1.48 percent, to 13,010.00, and the Nasdaq Composite Index .IXIC jumped 67.91 points, or 2.8 percent, to 2,480.71.
$1=$1.02 Canadian Editing by Peter Galloway