CANADA STOCKS-Commodities, Fed rate cut spur big gain

Wed Oct 29, 2008 4:50pm EDT
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*TSX rises 3.8 percent, extends Tuesday's 7 percent gain

*US Fed announces half point rate cut to 1 percent

*Nexen climbs after quarterly profit beats expectations

(Adds official closing numbers, quote, details)

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 higher commodity prices, with the gain supported by the U.S. Federal Reserve's half-point interest rate cut.

Leading the way up was 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 Fed's half percentage point cut, which took its key fed funds 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."   Continued...