UPDATE 2-Toronto stocks rally as U.S. bailout hopes revive

Tue Sep 30, 2008 11:58am EDT
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*TSX rallies after near 7 percent drop on Monday

*Energy sector climbs 5 percent as oil bounces back

*Hopes for U.S. bailout plan boost financial services

(Adds details, analyst's comments, updates figures)

TORONTO, Sept 30 (Reuters) - The Toronto Stock Exchange's main index rallied on Tuesday morning as oil and gas stocks got a boost from crude's recovery and market hopes for a deal on the $700-billion Wall Street bailout plan revived.

The index tumbled nearly 7 percent on Monday, the biggest drop in eight years, as U.S. lawmakers rejected the rescue plan.

Shortly before 11:30 a.m., the energy group, which dropped 10.6 percent in the previous session, was leading the way, up 5.2 percent as oil bounced back toward $99 a barrel. [ID:nSP246010]

In the oil patch, EnCana Corp (ECA.TO: Quote) jumped 4.8 percent to C$68.13, while Canadian Natural Resources (CNQ.TO: Quote) was up 8.6 percent at C$70.90.

"The main thing pushing it this morning is there is the belief that they are going to renegotiate and tweak the bailout package over the next one or two days," said Steve Ibel, institutional equities trader at Beacon Securities in Halifax, Nova Scotia.   Continued...