October 28, 2008 / 2:24 PM / 9 years ago

CANADA STOCKS-Key index rallies, boosted by commodities

*Materials up 6.8 percent on firmer metals prices

*Energy sector rises 5.8 percent as oil above $64

*Manulife Financial up 7 percent following slump

*Rogers climbs after strong quarterly results

(Adds details)

TORONTO, Oct 28 (Reuters) - The Toronto Stock Exchange’s main index climbed nearly 5 percent shortly after the open on Tuesday as commodity prices rose, spurring a recovery in resource shares after Monday’s steep drop.

The rally came after a big tumble on Monday, when the index logged its second biggest percent drop ever and closed below 9,000 for first time in nearly four years, losing more than 300 points in the last half hour of trade.

Heavily-weighted stocks that pushed the market higher on Tuesday included insurer Manulife Financial (MFC.TO), which rose 7 percent, and oil company EnCana Corp (ECA.TO), which was up 6.5 percent.

Given Monday’s drop, investors are shopping for beaten down stocks, said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.

“We were way, way oversold by any way you measure,” Chandler said. “At points in time you get exhaustion on the sell side and you get people coming in bargain-hunting on the buy side, and that’s what you’re seeing today.”

At 10:00 a.m., the S&P/TSX composite index .GSPTSE was up 424.92 points, or 4.98 percent, at 8,962.26, with all of its 10 main groups higher.

The oil and gas sector gained 5.8 percent as the price of oil rose above $64 a barrel. [ID:nSP356619] EnCana rose 6.5 percent to C$54.37.

Materials rose 6.8 percent as metals prices firmed. Barrick Gold (ABX.TO) rose 5.4 percent to C$23.74.

The financials group rose 4.2 percent, even after brokerage Dundee Securities downgraded the country’s biggest banks, saying earnings estimates and valuations for the banks will remain under pressure and will decline even further in 2009. [ID:nBNG381855]

Manulife Financial rose 7 percent to C$22.63, while Royal Bank of Canada (RY.TO) climbed 2.6 percent to C$43.59.

In earnings, Rogers Communications Inc (RCIb.TO), the country’s biggest wireless service provider, said quarterly profit jumped 84 percent, beating analysts’ expectations, helped by sales of Apple’s iPhone. [ID:N27347751]

Rogers lowered its 2008 outlook for its wireless unit as costs to activate new subscribers mount. The stock rose 5.3 percent to C$30.60. ($1=$1.29 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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