*TSX up 73.82 points, or 0.64 percent, to 11,626.58
*Potash Corp soars 23.5 pct after it rejects BHP bid
*Magna jumps after court OKs payout to Magna chairman (Updates to midmorning, adds quote)
By Jennifer Kwan
TORONTO, Aug 17 (Reuters) - Toronto’s main stock index rose on Tuesday morning after Potash Corp of Saskatchewan (POT.TO) rejected an unsolicited $38.6 billion bid for the company, raising the prospect of a higher bid and other takeover activity in the fertilizer sector.
Potash Corp, the world’s biggest fertilizer company, said its board rejected BHP Billiton’s offer as “grossly inadequate” and its shares shot up 23.5 percent to C$144.74. [ID:nSGE67G0DT].
Fellow fertilizer producer Agrium (AGU.TO) rose 3.9 percent to C$71.49, helping to boost the index’s materials sector by 3.3 percent.
“Generally speaking, in this sort of situation, where there’s smoke there’s fire,” said Bob Gorman, chief portfolio strategist at TD Waterhouse.
“You could have a higher bid come out of BHP or you could have other players enter here with a view to making bids themselves. Or the third possibility is that this sort of activity naturally puts the spotlight on the sector involved.”
Gorman said that investor focus could also spark other merger and acquisition activity.
At 10:20 a.m. (1420 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 73.82 points, or 0.64 percent, at 11,626.58.
Six of the TSX’s 10 main sectors were higher, with the energy group also supporting the resource-heavy index as oil rose above $76 a barrel. Oil snapped a five-day losing streak to rebound as firmer equity markets and a weaker dollar outweighed concerns about the pace of global economic recovery.[O/R]. Oil company Canadian Natural Resources (CNQ.TO) climbed 1.8 percent to C$34.51.
Shares of Magna International MGa.TO climbed 3.8 percent to C$82.64 after a court approved on Tuesday a plan by Magna to pay founder Frank Stronach close to a billion dollars in exchange for giving up control of the auto parts giant. [ID:nN17267794]
“It removes uncertainty surrounding the future of Magna shares. Ultimately, investors value simplicity and clarity,” Gorman said.
$1=$1.03 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway