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* TSX rises 1.49 percent to 9,891.93
* Financials lead TSX higher, follow U.S. banks (Adds details, quote)
By Ka Yan Ng
TORONTO, July 13 (Reuters) - Toronto's main stock index bounced back from a big decline to finish 1.49 percent higher on Monday with financial shares leading the charge after a prominent U.S. banking analyst upgraded Goldman Sachs Group Inc (GS.N).
The financials sector, which accounts for about a third of the TSX index weighting, climbed 2.7 percent after analyst Meredith Whitney upgraded Goldman to a "buy" rating. [ID:nBNG121776]
"Meredith Whitney seems to be the financial analyst that people pay attention to," said Steve Ibel, institutional equities trader at Beacon Securities in Halifax. "It will give the market a bit of a lift in the financial sector. But it probably will be a one-day event."
Four of the top five heavyweight advancers were from the financial group, led by Royal Bank of Canada (RY.TO), up 3.04 percent at C$46.50.
Manulife Financial (MFC.TO) followed, up 4.2 percent at C$20.03, while Bank of Nova Scotia (BNS.TO) rose 2.52 percent to C$41.49, and Toronto-Dominion Bank (TD.TO) was up 2.2 percent at C$58.05.
The S&P/TSX composite index .GSPTSE closed up 144.80 points, or 1.49 percent, at 9,891.93. Earlier in the day it fell more than 1 percent.
All 10 main groups were higher. The financial sector's gains paled in comparison with those of its U.S. counterpart, but it made a strong attempt to catch up and vaulted more than 1 percent higher late in the session.
"The U.S. financials are on fire. Our financials are up, but nothing to what we're seeing in the States," said Francis Campeau, broker at MF Global Canada in Montreal.
U.S. stocks rallied more than 2 percent as bullish comments on financial sector performance lifted hopes that U.S. banks' quarterly results may be stronger than expected. [ID:nN13205956]
Most sectors accelerated gains late in the session and some turned positive in the closing minutes. The energy group rose 1.28 percent, despite oil prices that briefly dropped to two-month lows. [ID:nSYD73698]
The materials group, home to mining stocks, turned higher as gold futures rallied above $920 an ounce in a technical rally. [ID:nLD600919] The sector rose 1.07 percent.
Fertilizer producer Potash Corp (POT.TO) was one of the biggest drags on the index, limiting gains in the materials group.
Potash Corp fell 1.1 percent to C$98.05 after the head of India's IFFCO, a farmer fertilizer cooperative, said that three international companies have agreed to supply Indian buyers with potash well below current spot market prices. [ID:nBNG121776]
A brighter Canadian business outlook in a pair surveys by the Bank of Canada helped to push the Canadian dollar about 1 percent higher versus the U.S. dollar, which in turn also gave a lift to the TSX.
The surveys reinforced other data suggesting the recession may have hit bottom, and that companies may face fewer hurdles in getting financing in coming quarters. [ID:nN13381629]
($1=$1.15 Canadian) (Additional reporting by Nina Lex; editing by Peter Galloway)