* TSX rises 61.39 points to 8,690.49
* Energy and gold-mining stocks surge
* Eighth straight higher close for index (Adds details, comments and official numbers)
By Frank Pingue
TORONTO, March 19 (Reuters) - Toronto’s main stock index closed higher for an eighth straight session on Thursday as the U.S. Federal Reserve’s plan to fight the recession boosted commodity prices and buoyed the resource-heavy index.
Energy and gold-mining companies headlined the rally, which was largely a continuation from Wednesday’s surge after the Fed unexpectedly said it would buy long-term Treasury bonds in a bid to revive the recession-hit economy.
Shares of Suncor Energy (SU.TO), the key driver behind the rally, rose 7 percent to close at C$33.40, while EnCana Corp ECA.TO closed up 4.8 percent at C$53.02.
The key Toronto index is now up 16 percent from the five-year low hit two weeks ago and finished the session at its highest closing level since Feb. 11. It was also the first time since December 2004 that the index has risen in eight straight sessions.
“We were so oversold that any rebound would expect to be a pretty strong one,” said Gavin Graham, director of Investments at BMO Asset Management.
“What’s been impressive is the way that this continued, and unlike in the States, where you have had a couple down days, we haven’t had that. We’ve seen the market keep going.”
The S&P/TSX composite index .GSPTSE rose 61.39 points, or 0.71 percent, to 8,690.49. The index shot 2.5 percent higher right after the open but by midday had relinquished much of that gain, spending the afternoon in a fairly tight range.
Four of the TSX’s 10 sectors ended higher, led by a 4.5 percent gain in the materials group, which includes gold and base metal miners, and the energy sector’s 4.28 percent rise.
Shares of gold miners rallied as the price of gold shot to a three-week high as inflation concerns flared as the Fed said it planned to spend $300 billion on long-dated Treasuries.
“If they are printing lots of extra dollars to do all the buying of these Treasuries, it’s probably a good idea to have something you can’t print,” Graham said.
Limiting the TSX’s latest gain was a 2.87 percent drop by the financial sector, which succumbed to profit-taking after a staggering 29 percent rally over the previous seven sessions.
In early March the TSX plunged to its lowest level in more than five years, piercing the low it hit in November of last year, which many investors at the time figured could hold as a bottom.
Unlike November’s big fall, however, the skid early this month was followed by a streak of gains that some experts say could hold up in the face of further bouts of selling.
“I think it’s too early to tell on that, but it’s certainly better to have these stocks up than down,” said John Kinsey, portfolio manager at Caldwell Securities Ltd. “You’ve got to start somewhere, so hopefully we’ve maybe put in a bottom and were working at putting in some kind of a base.”
$1=$1.24 Canadian Editing by Peter Galloway