UPDATE 1-Toronto stocks rebound as banks offset resources

Thu Mar 20, 2008 11:17am EDT
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(Updates stock movement, adds details, quotes)

TORONTO, March 20 (Reuters) - The Toronto Stock Exchange's main index bounced back from a loss of 200 points on Thursday morning as advances in the banking sector helped offset downward momentum from resource shares.

Bank of Montreal BMO.TO was among the biggest lifts on the index, rising C$1.76, or 4.2 percent, to C$43.86, after the bank said late on Wednesday that it has reached agreements to restructure its Apex and Sitka commercial paper trusts.

The development helped inject some optimism into the financial sector, which added 1.2 percent. National Bank of Canada NA.TO was up C$2.24, or 5 percent, at C$47.24, and Canadian Imperial Bank of Commerce CM.TO rose C$2.05, or 3.4 percent, to C$62.22.

Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario, said the restructuring "put a pin in what could have been a bigger loss and you're getting a sentiment move up in banks, and the banks, of course, at least on a short-term basis, were very, very oversold."

"(But) the excesses that are in the financials system, which took years and years and years to put together, are not likely to be unwound in a short period of time, so the rally that you're seeing in financials is probably not going to be beginning of a new leg up."

In a volatile session, the S&P/TSX composite index .GSPTSE was up 76.32 points, or 0.6 percent, at 12,785.70 in the late morning, with seven of its 10 main sectors on the upside. The index skidded 200 points shortly after the opening bell.

The energy sector also rebounded after helping take the index lower in the morning, gaining 0.3 percent, even though the price of oil dropped below $100 a barrel. On the downside, Suncor Energy SU.TO continued to weigh, giving up 51 Canadian cents, or 0.5 percent, to C$96.16, but Petro-Canada PCA.TO edged up 36 Canadian cents, or 0.8 percent, to C$43.26.

The resource sector was off 0.2 percent, easing back from earlier lows, with Barrick Gold ABX.TO down C$1.72, or 3.2 percent, at C$44.24.

The index plunged more than 400 points in the previous session, amid sliding resource shares sparked by tumbling commodity prices amid concern over the prospects of demand for resources in the face of a slowdown in the United States.

($1=$1.03 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)