CANADA STOCKS-Optimism, resource strength push TSX higher

Fri Jan 2, 2009 11:41am EST
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* Energy issues rise, oil bounce reinforces gains

* Canadian Natural, Suncor, EnCana are top three movers

* Financials push higher; Manulife weighs (Updates to late morning, adds analyst comments)

TORONTO, Jan 2 (Reuters) - Toronto's main stock index climbed nearly 2 percent on Friday as early broad-based weakness started to reverse, led by strength in resources, despite underlying softness in commodity prices.

The oil and gas sector gained 4.6 percent despite an earlier weaker crude price. By late morning, the price of oil bounced more than $2 a barrel to above $46, reinforcing the energy sector's gains.

The heavily weighted energy group has typically followed gyrations in oil but top names such as EnCana (ECA.TO: Quote), Canadian Natural Resources (CNQ.TO: Quote), and Suncor Energy (SU.TO: Quote) -- the top three index movers -- claimed solid gains early in the first trading session of the year.

Canadian Natural was up 5 percent at C$51.21, while EnCana gained 3.6 percent to C$59.01. Suncor added 5.1 percent to C$24.95.

Materials clawed back from early weakness, climbing 2.3 percent. Initially a sliding gold price put pressure on the influential gold miners, but base metals prices, which were off to a better start in 2009, helped to overcome losses.

"I think right now I would say that most of the stocks are more related to the stock market as opposed to the underlying commodities," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.   Continued...