UPDATE 1-Toronto stock index surges on RBC writedown relief

Wed May 14, 2008 11:16am EDT
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(Adds details, analyst's comments)

*TSX index hits record high

*Financials up after RBC details writedowns

*Modest U.S. inflation provides boost

By Jonathan Spicer

TORONTO, May 14 (Reuters) - The Toronto Stock Exchange's main index advanced on Wednesday morning on relief that writedowns announced by Royal Bank of Canada (RY.TO: Quote) for its second quarter weren't worse.

Financial stocks rose 1.2 percent, helping the index to a record high.

The Canadian benchmark also benefited from consumer price data that showed that U.S. inflation rose only modestly last month, leaving the door open for the Federal Reserve to cut interest rates further.

With banks taking the lead from recently hot resource shares, "various sectors are handing the baton to new sectors, and that's good to see," said Irwin Michael, portfolio manager at ABC Funds.   Continued...