Toronto stocks set for recovery after selloff

Tue Dec 18, 2007 9:05am EST
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TORONTO Dec 18 (Reuters) - The Toronto Stock Exchange's main index was seen opening higher on Tuesday, recovering some of the ground lost in Monday's massive selloff, as firm commodity prices underpin the market.

But financial issues could temper the gains as the country's biggest banks try to reach an agreement on the issue of bailing out Canada's troubled asset-backed commercial paper market.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE begins the day at 13,387.11 after dropping a whopping 287 points on Monday on the back of weak resource issues and worries over the state of the U.S. economy.

"We will probably recover some of yesterday's 287 point loss and get some strength from the commodity sector," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

"We are due for a little bit of a recovery and it is the recovery that will drive the market here today."

Oil companies are seen leading the way as the price for U.S. crude oil climbed 1.4 percent to close to $92 a barrel after Turkish troops crossed over into Kurdish territory in northern Iraq, escalating tensions.

Precious metals are also seen helping in the recovery as platinum touched a record high and gold pushed toward $800 an ounce.

However, base metals shares were seen falling as the prices for the key metals, including copper and aluminum, weakened on global demand worries.

The heavily weighted financial shares could also be in the spotlight. TD Bank TD.TO said on Monday it was willing to consider steps that will help repair the third-party asset-backed commercial paper market but didn't believe it should shoulder a burden it didn't create.   Continued...