UPDATE 2-Toronto stocks propelled higher by banks

Tue Mar 18, 2008 4:44pm EDT
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(Updates official closing numbers, adds details, quotes)

TORONTO, March 18 (Reuters) - The Toronto Stock Exchange's main index rallied on Tuesday with bank stocks powering higher after an aggressive interest rate cut in the United States and on bargain-hunting after the previous day's losses.

Although the 75 basis-point cut by the U.S. Federal Reserve was less than the full percentage point that some had hoped for, investors cheered it as another move to stave off a U.S. recession.

Banking stocks, which have been battered by the faltering U.S. subprime mortgage market, led the way up, gaining 4.1 percent. The sector also benefited from bargain-hunting after the group slid in a broad market selloff on Monday.

The major banks were among the biggest weighted advancers on Tuesday, including Canadian Imperial Bank of Commerce CM.TO, which rose C$3.81, or 6.7 percent, to C$60.75, and Royal Bank of Canada RY.TO, up C$2.21, or 5 percent, at C$46.53.

The S&P/TSX composite index .GSPTSE closed up 184.55 points, or 1.42 percent, at 13,136.70 with all but two of its 10 main sectors on the upside.

A 1.4-percent gain in the oil and gas sector pushed the benchmark higher, while the price of oil was also boosted by the Fed's action. Imperial Oil IMO.TO rose C$1.73, or 3.4 percent, to C$53.35, and Canadian Natural Resources CNQ.TO was up C$1.38, or 2 percent, at C$71.03.

But on the downside, the materials sector slid 2.4 percent, pulled lower by a sharp 5.6 percent fall in shares of gold producers as U.S. gold futures retreated in after-hours trading. Barrick Gold ABX.TO was down C$2.91, or 5.6 percent, at C$49.28, and Kinross Gold K.TO fell C$1.77, or 6.8 percent, to C$24.15.

($1=$0.99 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)