UPDATE 1-Toronto stocks higher on stronger banks

Thu Jul 17, 2008 11:15am EDT
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* TSX extends gains on upbeat U.S. bank results

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TORONTO, July 17 (Reuters) - The Toronto Stock Exchange's main index extending its gains on Thursday morning as upbeat quarterly earnings in the battered U.S. financial sector helped boost Canada's bank issues.

The heavily weighted financials sector, which makes up about a quarter of the benchmark, shot up 2 percent, adding to its 5.9 percent gain on Wednesday.

The rise was largely prompted by healthy quarterly results posted on Thursday by No. 3 U.S. bank JPMorgan Chase & Co JPM.N, following on the heels of results from Wells Fargo & Co WFC.N on Wednesday.

"Because the financials have caused so much grief, any kind of sentiment change is very, very important in the market," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary.

"There's been some early indications that the pessimism may be excessive."   Continued...