CANADA STOCKS-TSX rebounds on speculation of Greek deal

Wed Feb 10, 2010 2:10pm EST
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* TSX up 41.11 points, or 0.36 percent, at 11,315.35

* Greek speculation helps banks pull index from loss

* Bernanke lays out path for policy changes (Adds details, quote)

TORONTO, Feb 10 (Reuters) - Toronto's main stock market index was moderately higher on Wednesday afternoon as speculation that a resolution to Greece's debt woes was near boosted Royal Bank of Canada RY.TO and other bank shares.

Royal Bank rose 1.8 percent to C$54.76, Toronto-Dominion Bank TD.TO climbed 1.2 percent to C$64.31, and Bank of Nova Scotia BNS.TO was up 1.3 percent at C$46.35.

Investors were seen to be closing out short positions ahead of an expected rally in the market if, as expected by some, the European Union summit in Brussels on Thursday comes up with a deal to alleviate Greece's debt problems.

"It seems we might be seeing some short-covering ahead of Europe's meeting tomorrow and that's what is fueling the afternoon rally," said Francis Campeau, broker at MF Global Canada, in Montreal.

The story was similar in the United States, where stocks recovered from morning losses after a report suggested a European rescue plan for debt-burdened Greece may be presented this week. [ID:nLDE6192QE]

At 1:36 p.m. (1836 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 41.11 points, or 0.36 percent, at 11,315.35. Earlier, it fell as much as 61.8 points.   Continued...