CANADA STOCKS-TSX up nearly 2 pct as banks, energy rally

Mon Jan 26, 2009 10:31am EST
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* Financial shares help power early rally in Toronto index

* Rise in oil prices boost energy shares

By Frank Pingue

TORONTO, Jan 26 (Reuters) - Toronto's key stock index climbed early Monday as rising European financial shares helped boost their Canadian counterparts, while a rally in oil prices powered the resource heavy index.

A recovery in beaten-down bank shares overseas helped set the tone in Toronto, where financial shares account for about 33 percent of the index.

A surge in ING, which said it would tap into government guarantees, and Barclays, which flagged a strong start to the year, set the tone for European stock markets and was enough to boost investors sentiment in Toronto.

Among the key stocks behind the Toronto index's early rally were Royal Bank of Canada RY.TO, whose shares rose 3.8 percent to C$29.17, and insurer Manulife Financial MFC.TO, which rose 2.6 percent to C$20.68.

"We came in this morning and the financials overseas were strong so that's spread out to the North American financials," said Bruce Latimer, a trader at Dundee Securities. "Plus people are sort of just sticking their toes in the water today."

Higher oil prices also helped power the TSX higher given its heavy weighting in energy stocks. Oil prices rose toward $47 a barrel on the perception that supply cuts by OPEC oil producers were beginning to put a floor under prices.

At 10:10 a.m. (1510 GMT), the S&P/TSX composite index .GSPTSE was up 166.11 points, or 1.93 percent, at 8,797.51 Nine of the TSX's 10 sectors were higher. (Reporting by Frank Pingue; Editing by Frank McGurty)