* TSX rises 30.59 points, or 0.27 percent, to 11,294.42.
* Index down 3.2 percent in June, falls 6.2 percent in Q2. (Adds details, quotes)
By Claire Sibonney
TORONTO, June 30 (Reuters) - Toronto's main stock index bounced higher on Wednesday following two days of steep falls as investors scooped up cheaper shares after fears of a funding crisis for European banks eased and U.S. data showed improved business activity.
Among heavyweight gainers, Canadian Natural Resources (CNQ.TO) jumped 0.8 percent to C$35.33, Bank of Montreal (BMO.TO) added 0.7 percent to C$57.74, and Barrick Gold Corp (ABX.TO) shot 1.9 percent higher to C$48.32.
"After two horrific down days, you'd expect a bounce," said John Kinsey, a portfolio manager at Caldwell Securities.
Market sentiment was boosted partly by news that the European Central Bank said commercial banks don't have to borrow as much as had been expected, easing concerns about how they would repay large emergency loans. [ID:nLDE65T0VB]
Investors digested a mixed bag of economic data: U.S. Midwest business activity grew more than expected, helping to offset a weak U.S. private sector jobs report, but Canadian GDP figures for April were flat. [ID:nN30395701] [ID:nN30434455]
Adding to investors' nervousness about the shaky global economic recovery and capping the index's gains, Moody's Investors Service announced it may cut Spain's Aaa debt rating and commodity prices weakened. [ID:nN30242422] [O/R] [MET/L] [GOL/]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 30.59 points, or 0.27 percent, at 11,294.42. On the month, the index was down 3.2 percent, and for the quarter it was down 6.2 percent.
Nine of index's 10 main sectors were higher. Energy shares were down 0.01 percent after a rise in U.S. fuel stocks pressured oil prices.
"I think commodities are holding steady," said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
"People are saying ... 'Oil is still at $75 a barrel, copper is still at $2.90 a pound, gold is still well over $1,200.' These companies seem to be undervalued even with the recent price falls in all these commodities."
On Tuesday, the TSX suffered its biggest drop since the "flash crash" of May 6 as slowing growth in China, worry over looming euro-zone bank repayments, and a drop in U.S. consumer confidence unnerved stock markets around the world.
"Yesterday was enough to shatter the confidence of even the most optimistic investor," Schwartz said.
"Today, it seems there's some bargain-hunting going on, in Canada at least."
Kinsey also pointed to short-covering buying on the last day of the month and quarter, and ahead of holidays in both Canada and the United States.
"There could be some window-dressing and some bottom-fishing by institutions trying to get their portfolios a little better organized," he said.
The Canada Day holiday is on Thursday and U.S. markets will be closed on Monday for Independence Day.
Market watchers focusing on Friday's U.S. Labor Department jobs data, which is expected to show a fall in nonfarm payrolls for June as temporary workers hired to conduct the U.S. census were laid off, but a gain in private payrolls. [ID:nN29266671]
"I guess we got an indication today from (Friday's U.S. private jobs data) that it's not going to be as good as expected but we're hoping that we'll see some job creation," Schwartz said.
$1=$1.06 Canadian Editing by Peter Galloway