* TSX up on commodities, financial issues weigh
* Gold strength helps boost materials 3.3 percent
* HudBay stock jumps on OSC ruling (Adds details, quote)
By Jennifer Kwan
TORONTO, Jan 23 (Reuters) - Toronto's main stock index was slightly higher on Friday morning as strength in commodity issues offset weakness in financial and consumer discretionary shares.
The tug-of-war kept the market largely directionless for a chunk of the morning after a weak opening that saw the index drop nearly 100 points. But gold helped to reverse course.
Gold rose to above $875 an ounce to help the TSX's resource-laden material's group rise 3.3 percent with Barrick Gold (ABX.TO) up 6.1 percent to C$47.42.
Energy issues also staged a comeback even as the price of oil, which fell below $42 a barrel on fresh signs of the depth of the recession, helped to push down the key sector in early activity. By midmorning, the energy group was up 0.7 percent with Suncor Energy (SU.TO) up 1.9 percent at C$23.35.
"Even with oil down today there are people thinking that oil is trying to make a bottom here," said Bruce Latimer, trader at Dundee Securities.
"Technically, some of the charts are telling you that. I think people are looking forward out."
At 11:04 a.m. (1604 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 39.14 points, or 0.46 percent, at 8,525.70. Four of the index's main groups were higher.
HudBay Minerals (HBM.TO) was the second most heavily traded stock on the index, rising 25.9 percent to C$4.43, after the Ontario Securities Commission ordered HudBay to hold a shareholder meeting before it proceeds with its planned C$550 million takeover of Lundin Mining (LUN.TO). [ID:nN23371375]
The decision could raise prospects that shareholders will reject a planned stock issue and the deal will not go through.
"If there's a vote and the deal is voted down then they're not going to have that massive share dilution," said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
"If you're a current shareholder that's positive."
Lundin was the most heavily traded issue and tumbled 20.2 percent to 95 Canadian cents.
Economic gloom helped to drive down the heavily weighted financial sector, down 1.2 percent, while the consumer discretionary sector fell by nearly 1 percent.
Sentiment was also hurt by earnings from General Electric (GE.N), which met expectations but were down steeply from the prior year, and the company warned of an extremely difficult 2009. [ID:nN23533557]
"It's such a diversified and large company. It's kind of indicative of what's going on in the whole economy in general when a big company like that faces adversity," said Beacon's Ibel. ($1=$1.25 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)