August 21, 2008 / 9:20 PM / 9 years ago

REFILE-UPDATE 5-Toronto stocks rise as commodity prices strength

(Refiles to fix Nortel Networks stock symbol in second-last paragraph)

* Main Toronto stock index rallies 1.4 percent

* Higher commodity prices boost energy, resource shares

* Financials, flat on the day, continue to struggle (Adds comments, details, official data)

By Wojtek Dabrowski

TORONTO, Aug 21 (Reuters) - The main index of the Toronto Stock Exchange finished about 1.4 percent higher on Thursday as energy and materials producers rallied on the back of stronger commodities.

The price of U.S. crude hit $121.18 a barrel, up $5.62, driven by rising tensions between the United States and energy-rich Russia. In the oil patch, Petro-Canada PCA.TO climbed more than 3 percent to C$47.93.

Gold rose above $830 an ounce as the U.S. dollar weakened. Agnico-Eagle Mines (AEM.TO) jumped 5.2 percent to end at C$60.75.

“(There was) a huge rebound today in commodity prices, so no surprise, the TSX is doing great,” said Kate Warne, Canadian market strategist at Edward Jones.

Investors have flocked to energy and resource shares as a shelter from weak financial stocks, which have continued to sputter in the face of tough credit markets and a slowdown in the global economy.

Sal Masionis, a stockbroker at Brant Securities, said it will be “quite a few quarters” before financials stabilize, recover and start to lure investors anew.

“There might be some trades in there, but I think that very few people know how much trouble they’re in and what kind of assets they’re holding,” he said of the sector.

The S&P/TSX composite index .GSPTSE rose 189.08 points, or 1.42 percent, to close at 13,539.22.

Overall, six of the 10 main subgroups of the index gained ground, including the heavily weighted energy and materials sectors, which rose 2.33 percent and 3.85 percent, respectively.

Financials edged 0.34 percent lower.

Among the day’s biggest gainers, Inmet Mining IMN.TO rose 4.8 percent to close at C$65.66.

In the oil and gas sector, Imperial Oil (IMO.TO) rose 3.7 percent to C$54.67.

Big losers included sportswear retailer Lululemon Athletica LLL.TO, which fell 6 percent to finish at C$20.38.

Shares of Rogers Communications Inc (RCIb.TO), which owns Canada’s biggest wireless carrier, shot up 4.2 percent to C$37.64 after the company began selling Research In Motion’s RIMM.ORIM.TO new BlackBerry Bold smartphone. RIM added 11 Canadian cents to finish at C$138.41.

Nortel Networks NT.TO, North America’s biggest maker of telephone gear, gained 1.4 percent to finish at C$6.42 after announcing a small acquisition of an online voice technology firm. It also said it was developing software that will let companies hold virtual meetings online.

In the United States, the Dow Jones industrial average .DJI rose 12.78 points, or 0.11 percent, to finish at 11,430.21. The tech-heavy Nasdaq market gave up 8.7 points to close at 2,380.38.

$1=$1.04 Canadian Reporting by Wojtek Dabrowski; editing by Peter Galloway

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