CANADA STOCKS-Financials power rally on TSX

Wed Jan 28, 2009 10:37am EST
 
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* Financials lead TSX higher on U.S. bank action hopes

* Seven banks and insurers are top advancers

* Materials group lower on falling gold price

* France's Total launches C$617 mln bid for UTS Energy (Adds details)

TORONTO, Jan 28 (Reuters) - Toronto's main stock index rose on Wednesday morning in a broad rally led by the heavily weighted financial sector, on hopes that Canada's C$40 billion ($32.8 billion) stimulus package and U.S. government action would promote economic stability.

There was optimism that the new U.S. administration was moving quickly to stabilize the ailing banking sector, helping to boost U.S. stocks, and as lawmakers prepared to vote on a stimulus package to boost the recession-hit economy.

This sentiment spilled over to the Toronto financials group, which rose 5.9 percent.

"We'll see if that's enough to sustain this rally," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"Anything you can do to take these assets off the bank's balance sheet would be helpful. Then you have to get the banks to start lending, to get the economy moving. It's one step."   Continued...