UPDATE 3-Toronto stocks rally as U.S. bailout hopes revive

Tue Sep 30, 2008 2:12pm EDT
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*TSX rallies after near 7 percent drop on Monday

*Energy sector climbs 6.6 percent as oil bounces back

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

(Adds analysts' comments, updates figures)

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

The index tumbled nearly 7 percent on Monday, the biggest drop in eight years, largely on the back of energy issues. Oils sank as oil tumbled more than $10 a barrel to below $97 as U.S. lawmakers rejected the rescue plan aimed at mopping up toxic assets at troubled financial institutions.

As hopes for the bailout revived on Tuesday, the energy group rose 6.6 percent as oil bounced back to $100 a barrel. [ID:nSP246010]

"The main thing pushing it ... 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.

Given the previous day's rout, it's no surprise to see the market rebound, said Fred Ketchen, director of equity trading at ScotiaMcLeod.   Continued...