Toronto stocks poised for turnaround

Tue Mar 18, 2008 9:09am EDT
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TORONTO, March 18 (Reuters) - Toronto stocks were poised for a higher opening on Tuesday as the market recovers from the previous session's steep losses which saw the key index notch its biggest decline in more than a month.

Investors will also keep a watchful eye on the U.S. Federal Reserve which is set to make another interest rate announcement later in the day.

Most pundits expect the Fed to implement a one percentage-point cut in U.S. short-term rates, taking the benchmark fed funds target rate down to 2 percent.

Over the weekend, the Fed made an emergency quarter-point cut to its discount rate to 3.25 percent and expanded lending to a wider range of big financial firms.

Meanwhile, Canada's annual inflation rate eased in February, leaving the Bank of Canada in a comfortable spot if it wants to follow its U.S. counterpart and slash interest rates aggressively amid growing market turmoil.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE begins the day at 12,952 after dropping 300.69 points, or 2.3 percent, on Monday amid more worries over the global credit situation and weak resources.

"We are going to see a rebound. Yesterday was a very drastic correction," said Luc Girard, director of the portfolio advisory group at Desjardins Securities in Montreal. "We had so much downside Yesterday."

Firmer resources are expected to lead the rise on Tuesday with most of the key commodities rebounding.

U.S. crude oil was up 2.4 percent at $108.21 a barrel on expectations that a cut in interest rates will hit the U.S. dollar and spur investor demand for oil.   Continued...