* Mining stocks climb; Rio Tinto to cut 14,000 jobs
* Financials sag as Great-West issues equity
* Nortel falls, to explore bankruptcy scenario -report (Adds quote, details)
By Jennifer Kwan
TORONTO, Dec 10 (Reuters) - Toronto’s main stock index shot higher on Wednesday morning on higher oil and metals prices and as optimism over global stimulus measures, including a possible bailout of the U.S. auto industry, lifted market sentiment.
Mining stocks rose as global miner Rio Tinto (RIO.AX) said it would cut 14,000 jobs, slash capital spending by more than half and sell more assets as it battles a collapse in commodity prices. [ID:nSP365347]
The beaten-down resource stocks were higher, in part, in response to the news, analysts say.
“The Rio Tinto move probably helps in the long run because they’ll take capacity out of the system,” said David Whetham, a resource fund manager at Scotia Cassels.
“If you have less supply then that will hopefully help prices in the long run.”
Oil and gas stocks rose 2.7 percent as oil gave back earlier strength but was still above $42 a barrel. [ID:nSIN422139]
“It’s them coming off those deep oversold levels,” Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario, said of the resource sectors.
“It’s also a belief that we are, with an increasing likelihood, going to see co-ordinated infrastructure spending programs announced early in the new year in multiple geographies that will auger well for the demand for a lot of materials.”
Toronto stocks followed equity markets around the world higher on firmer commodity prices and optimism over a possible bailout of the U.S. auto industry, as well as other global stimulus measures to fight a deepening economic crisis. [MKTS/GLOB]
At 11:15 a.m. (1615 GMT), The S&P/TSX composite index .GSPTSE was up 142.06 points, or 1.69 percent, at 8,539.62, with seven of its 10 main groups higher.
Financials were down 0.7 percent with Great-West Lifeco Inc (GWO.TO) sinking 7.6 percent to C$20.60 after it said on Tuesday it plans to issue a total of C$1 billion in common shares to the public and to its controlling shareholder, Power Financial Corp (PWF.TO). [ID:nN09284029]
Shares of George Weston Ltd (WN.TO) rose 2.3 percent to C$62.30 after Mexico’s Bimbo BIMBOA.MX said on Wednesday it had reached an agreement to buy Weston’s U.S. breadmaking unit for $2.38 billion.
Nortel Networks Corp NT.TO sank 21.9 percent to 50 Canadian cents after the Wall Street Journal reported the telecoms equipment maker has sought legal advice on a bankruptcy protection scenario in the event that its restructuring plan fails.
A Nortel spokesman told Reuters ”no bankruptcy filing is imminent, but added the company has engaged advisers to help it plot its future. [ID:nBNG408213] ($1=$1.26 Canadian) (Reporting by Jennifer Kwan)