UPDATE 2-Toronto stocks rise on U.S. mortgage bailout plan

Mon Sep 8, 2008 11:03am EDT
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*U.S. Fannie Mae, Freddie Mac bailout boosts banks

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TORONTO, Sept 8 (Reuters) - The Toronto Stock Exchange's main index rose on Monday morning, jolted higher by the bailout of U.S. home mortgage giants Fannie Mae FNM.N and Freddie Mac FRE.N, which helped ease concerns over the year-old credit market crisis.

But the benchmark index backed off the 2.3-percent rise it registered at the open as investors remained cautious due to nagging concerns over slowing global economic growth, said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"I'd call it the light at the end of the tunnel," Nakamoto said of initial market reaction. "For a while, there didn't seem to be any light."

However, investors must still contend with "the global slowing that is out there," he added.

"I think there are a lot of doubters out there saying this is nothing more that a short-cover rally," Nakamoto said.

At midmorning, the S&P/TSX composite index .GSPTSE was up 150.08 points, or 1.17 percent, at 12,966.50, backing off after surging 300 points, or 2.3 percent, at the open. Seven of its 10 main groups was higher.   Continued...