4 Min Read
* TSX recovers from year low hit in morning trade
* Infotech sector led by 10 pct jump in RIM
* Survey sees gold rising as high as $1,080/oz this year
* Nine of 10 groups advance (Adds details, analyst's comment)
By Ka Yan Ng
TORONTO, Jan 15 (Reuters) - Toronto's main stock index closed strongly higher on Thursday, reversing early losses, as a rebound in U.S. stocks on optimism about government stimulus helped boost nearly all Canadian market sectors.
Earlier in the day, the resource-heavy index hit its lowest point this year, hurt by nagging concerns about a drop in oil demand, while banking shares also tumbled.
U.S. stocks rebounded to trade higher, helped by hopes that Washington would take action to aid banks. A CNBC report said a government guarantee for Bank of America would be worth between $100 billion and $200 billion.
Concerns about intensifying recession were underscored by weak factory activity in the United States, although the surveys from New York state and the Mid-Atlantic regions showed contraction had eased a little.
"We had some data that was not great, but better than expected. And now there's this talk about Bank of America getting bailed out," said Levente Mady, a broker at MF Global Canada, in Vancouver.
"Plus the market was extremely oversold so the market was due for a bounce."
The S&P/TSX composite index .GSPTSE finished 2.2 percent higher, up 191.25 points at 8,879.61. Nine of its 10 main groups advanced. The exception was utilities.
The materials group gained 4.3 percent, helped by the rising gold price. Barrick Gold (ABX.TO) rose 6.9 percent to C$42.06.
The price of gold should surge above last year's record levels, rising as high as $1,080 an ounce this year as government fiscal stimulus efforts undermine the greenback and set the stage for a sharp rise in inflation, precious metals consultancy firm GFMS said. [ID:nN15473985]
The oil and gas group also headed higher despite a drop in the price of crude. Oil prices slid more than 6 percent amid gloom about the health of the world economy, but shares of Canadian Natural Resources (CNQ.TO) and Suncor Energy (SU.TO) rebounded in the afternoon.
The index's turn into positive territory pared its losses for the year so far to 1.2 percent.
"I guess one could attribute some of this just to bargain-hunters coming in after a few down days here," said Michael Sprung, president at Sprung & Co. Investment Counsel.
"This morning the market was still suffering from the shock of Nortel and perhaps some of that has worn off as the day progressed."
Nortel Networks NT.TO was the most active issue for a second session in a row, the day after its shares fell as much as 79 percent on news the telecom equipment maker had filed for bankruptcy protection. They ended the session 4.2 percent lower at 11.5 Canadian cents.
Research In Motion RIM.TO, up 10 percent at C$62, was the biggest mover, helping to boost the information technology group.
The blue chip S&P/TSX 60 index .TSE60 closed up 2.4 percent at 536.69.
The Dow Jones industrial average .DJI rose 12.35 points, or 0.15 percent, to 8,212.49. The Nasdaq Composite Index .IXIC was up 22.20 points, or 1.49 percent, at 1,511.84.
$1=$1.25 Canadian Additional reporting by Frank Pingue; editing by Peter Galloway