UPDATE 1-Toronto stocks up, but bruised by BCE and oil

Thu May 22, 2008 11:03am EDT
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(Adds details, analyst's comment)

*TSX hands back most of its early gains

*BCE plunges on court ruling, oil reverses

*Banks rebound from recent slide

By Jonathan Spicer

TORONTO, May 22 (Reuters) - The Toronto Stock Exchange's main index clung to some of its early gains on Thursday morning but activity was volatile as the buyout of BCE (BCE.TO: Quote) seemed in jeopardy and oil prices dropped sharply, while financial shares bounced back from a three-session decline.

The heavyweight shares of BCE Inc, Canada's biggest telecoms company, were down more than 13 percent -- the TSX's worst performer by far -- after a court ruling cast doubt on its proposed sale to a buyout group led by Ontario Teachers' Pension Plan. See: [nN22488153]

"Today would be a rebound day except that BCE is dampening that part of the index, and the news on BCE is clearly a surprise," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

The S&P/TSX composite index .GSPTSE opened lower, promptly rebounded more than 80 points, and then handed back most of those gains. At midmorning, it was up 11.45 points, or 0.1 percent, at 14,801.82.   Continued...