UPDATE 2-Toronto stocks rally back with Potash, Agrium

Fri Oct 3, 2008 11:26am EDT
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*TSX bounces after near 7-percent drop on Thursday

*CIBC rises on move to limit U.S. residential exposure

*Materials get 8.5 pct boost from top gainer Potash

*Market awaits U.S. House vote on big bailout plan

(Adds details, analyst's comments, updates figures)

TORONTO, Oct 3 (Reuters) - The Toronto Stock Exchange's main index rose sharply on Friday morning after Thursday's near 7-percent drop, with commodity shares rebounding ahead of a vote by the U.S. House on the revised $700 billion bailout package for the financial industry.

The materials group led the way higher, up 8.5 percent, with fertilizer producers Potash Corp of Saskatchewan (POT.TO: Quote) up 11.3 percent at C$112.45, and Agrium Inc (AGU.TO: Quote) up 6.8 percent to C$48.05. [ID:nN03334235]

Both stocks plunged on Thursday after Merrill Lynch downgraded them because of uncertainty about earnings in the fertilizer sector.

Investors bought into the market after two "very severe trading sessions" this week, said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.   Continued...