Toronto stocks set to ride oil to uncharted high

Wed May 21, 2008 9:09am EDT
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*Record oil to push TSX to new record

*Talisman may benefit from overhaul plan

*Higher-than-expected inflation may dampen stocks

TORONTO, May 21 (Reuters) - The Toronto Stock Exchange's main index, riding a wave of bullish oil, was set to rise again on Wednesday as crude topped $130 a barrel in early futures activity.

The Canadian benchmark index kicks off the session above the 15,000-level for the first time, and may also get a lift from Talisman Energy TLM.TO, which late on Tuesday detailed a plan aimed at boosting returns.

Natural gas and gold were also firm, but crude oil was center stage on Wednesday, reaching a record high on the back of tight fuel stocks and long-term production concerns. For details, see: [nSP114922]

"I suspect the oil will be enough to keep us afloat here today," said Michael Sprung, president at Sprung & Co. Investment Counsel.

If there was a sour note, however, it was the consumer price index, which showed Canadian inflation rose more than expected last month due largely to rising gasoline prices. See: [nN21333512]

The data was seen to somewhat dampen expectations of further interest rate cuts, which the Bank of Canada has used to stimulate the economy and, as a result, Canadian stocks.   Continued...