(Refiles to insert dropped ‘a’ in first paragraph)
* Energy group higher despite oil price dip
* Nexen jumps 16.7 pct as takeover rumors emerge
* Materials up 3.4 percent as gold firms
* Trading muted with U.S. markets closed for Thanksgiving (Adds quotes, details)
By Jennifer Kwan
TORONTO, Nov 27 (Reuters) - The Toronto Stock Exchange’s main index rose for a fifth straight day on Thursday thanks to strength in energy and materials issues, raising hopes that the market is close to finding a bottom.
Heavily weighted stocks that helped the market move higher included Potash Corp of Saskatchewan (POT.TO), up 4.5 percent at C$79.69, and Nexen Inc NXY.TO, which was 16.7 percent higher at C$26.01.
Shares of Nexen soared as Canada’s No. 4 independent oil exploration company again had to fend off speculation that it is poised to be bought by a larger rival. [ID:nN27403565]
The energy sector was up 3.4 percent even though the price of oil CLc1, at about $53.82 a barrel, was lower on the day.
The materials group rose 3.4 percent as gold firmed on a weaker U.S. dollar. [ID:nLR122834] Barrick Gold Corp (ABX.TO) rose 2.4 percent to C$36.49.
“They are deeply, deeply oversold here so it’s not surprising that you would see days where they have some fairly significant moves up,” Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario, said of the two commodity-related sectors.
“There’s also a belief that the markets are trying to put in a bottom,” Chandler said.
The moves occurred in a low-volume environment because U.S. markets were closed for the Thanksgiving holiday.
The S&P/TSX composite index .GSPTSE was up 110.25 percent, or 1.28 points, at 8,753.77, with six of its 10 main groups higher.
The market is ignoring relative softness in commodities and there is likely some short-covering going on, said Douglas Davis, chief executive at Davis-Rea.
“If we haven’t seen a bottom here. It may happen in the next three weeks. Somewhere in this period I think we’ll find a a bottom,” Davis said.
Market volatility has subsided relative to the extreme see-saw action of October when the TSX dropped nearly 17 percent.
Indeed, TD Waterhouse predicted on Thursday that while market volatility will continue in the very near term, it will begin to decline and market indexes will rise in 2009.
“Looking ahead to 2009, the key questions on the minds of investors are when the heavy volatility will end, what the ‘floor level’ of the current bear market will be, and when will stocks begin to recover,” said Bob Gorman, chief portfolio strategist at TD Waterhouse, releasing the forecast.
Markets are expected to draw support from a number of sources including low stock valuations, looser credit conditions and monetary and fiscal policies to help stimulate economies.
After the the close on Thursday, the federal government said the Canadian economy slid into recession in the fourth quarter but, contrary to expectations, Ottawa should stay in surplus this year and in the next five years. [ID:nN27411212]
In the economic update, which focused on fiscal restraint, the government also proposed giving expanded powers to the finance minister and cabinet to support financial institutions hit by the global crisis, including the authority to inject capital into some banks. ($1=$1.23 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)