CANADA STOCKS-Commodities, Fed rate cut spur big TSX gain

Wed Oct 29, 2008 5:36pm EDT
 
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* TSX rises 3.8 percent, extends Tuesday's gains

* Fed cuts key rate by half a point to 1 percent

* Nexen climbs after profit beats expectations (Adds quotes, details)

By Jennifer Kwan

TORONTO, Oct 29 (Reuters) - The Toronto Stock Exchange's main index closed 3.8 percent higher on Wednesday as energy and materials issues rose on stronger commodity prices, with the gains supported by the U.S. Federal Reserve's half-point interest rate cut.

Leading the way were oil company EnCana Corp (ECA.TO: Quote), which rose 6.7 percent to C$59.20, and insurer Manulife Financial (MFC.TO: Quote), which was up 7.7 percent at C$25.30.

The market was encouraged by the U.S. central bank's interest rate move, which took its key rate down to 1 percent, in an attempt to stimulate the economy.

"The real big story has been the rate decrease in the States," said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

"With the rate decrease it affects the (U.S.) dollar. If the dollar goes down, oil goes up -- they are inversely related -- so that has been helping to push the market up in Toronto," Ibel said.   Continued...