* 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.”
Canada’s five biggest banks and two largest insurers were the top key advancers, including Royal Bank of Canada (RY.TO), up 5.1 percent at C$32.23, and Toronto Dominion Bank (TD.TO), up 5.8 percent at C$42.02. Bank of Nova Scotia (BNS.TO), Manulife (MFC.TO), and Bank of Montreal (BMO.TO) were also big gainers.
The financials were also supported by proposed plans outlined in Tuesday’s federal budget. The government said it would commit C$50 billion more to a program that buys insured mortgages and would also give itself the authority to inject capital into banks and financial firms that need support. [ID:nN27430329]
At 10:15 a.m. (1515 GMT), the S&P/TSX composite index .GSPTSE climbed 109.31 points, or 1.3 percent, to 8,8868.94. Seven of the TSX’s main 10 groups were higher. Materials fell 5.4 percent, partly on weakness in the price of gold.
The oil group was also in focus after the first takeover attempt in the oil sands sector since falling oil prices triggered an economic meltdown.
Shares in oil sands developer UTS Energy Corp UTS.TO doubled early on Wednesday, after French oil major Total SA (TOTF.PA) launched an unsolicited C$617 million bid for the company. UTS rose 83 Canadian cents to C$1.65 as analysts said a higher offer may come. (Reporting by Ka Yan Ng; Editing by Jeffrey Jones)