CANADA STOCKS-Commodities, Fed rate cut hopes lift market

Wed Oct 29, 2008 10:57am EDT
 
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*TSX extends gain after 7 percent rise on Tuesday

*US Fed set to announce interest rate cut decision

*Nexen rallies after quarterly profit beats expectations

(Adds quote, details, updates figures)

By Jennifer Kwan

TORONTO, Oct 29 (Reuters) - The Toronto Stock Exchange's main index rallied on Wednesday morning as commodity stocks got a lift from underlying prices, and as hopes rose that the U.S. Federal Reserve and other central banks would cut interest rates further to try to revive global growth.

Heavily-weighted stocks that helped to push the market higher included oil company EnCana Corp (ECA.TO: Quote), which rose 6.3 percent to C$58.99, and insurer Manulife Financial (MFC.TO: Quote), which was up 8.6 percent to C$25.52.

Also providing encouragement was the expectation that the U.S. Federal Reserve will chop its benchmark interest rate by at least 50 basis points later on Wednesday, which would take the fed funds rate down to 1 percent.

Typically, after a gain such as the one logged on Tuesday investors would be inclined to take profits, said Douglas Davis, president at Davis-Rea. However, investors are hoping for further rate cuts.   Continued...