October 20, 2010 / 8:49 PM / in 7 years

CANADA STOCKS-Golds, financials lead TSX rebound

* TSX rises 0.63 percent to 12,649.92

* Materials, banks lead rebound

* Investors reassess Chinese rate hike (Updates to close)

TORONTO, Oct 20 (Reuters) - Toronto’s main stock index rebounded on Wednesday as gold miners and financials were strong performers in a broad rally, one day after the index slumped on an unexpected Chinese interest rate hike.

Gold prices rallied as investors assessed the initial reaction to China’s rate hike as overblown, while the greenback weakened, boosting U.S. dollar-denominated commodities and sending the materials sector up more than 1 percent.

“It doesn’t really indicate the depth of how much they’re going to tighten,” said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management, referring to China’s rate move.

“The primary trend is investors are looking to scoop up shares in materials, gold, and companies that could benefit from quantitative easing (by the Federal Reserve), which at this point is still speculation,” Zohny said.

Kinross Gold (K.TO) added 1.7 percent to C$18.59 and Teck Resources TCKb.TO gained 3.24 percent to C$45.31.

Financials gained 0.72 percent, rising for a fourth straight session, helped in part by higher earnings at U.S. bank Wells Fargo & Co. Toronto-Dominion Bank (TD.TO) rose 1.12 percent to C$76.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE gained 79.37 points, or 0.63 percent, to 12,649.92, recouping nearly all of Tuesday’s losses. Nine of the index’s 10 main groups were higher.

Sentiment was also boosted by a suite of strong corporate earnings reports in the United States, while the U.S. Federal Reserve’s Beige Book provided further evidence that additional monetary easing was coming soon.

On the downside, EnCana (ECA.TO) dropped 3.42 percent to C$29.13 after the country’s largest natural gas producer reported third-quarter profit below market expectations, cut its 2010 production outlook and lowered its forecast for cash flow per share. [ID:nSGE69J0FK]

$1=$1.02 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson

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