UPDATE 3-Toronto stocks lifted by banks, U.S. rate cut
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By Leah Schnurr
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: Quote), 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.
Sal Masionis, stockbroker at Brant Securities, said that there is a feeling that recent rate cuts from the Fed as well as moves to make sure financial institutions have access to liquid funds will start to ease some of the pressure of tightness in global credit markets.
"(Interest rates) have dropped 200 basis points in two months," Masionis said. "This is huge, but obviously the system is in quite bad shape and there's a lot of nervousness because we don't know what's behind each company.
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. Continued...