UPDATE 5-Toronto stocks soar as U.S. bailout hopes revive

Tue Sep 30, 2008 5:41pm EDT
 
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* TSX rallies 4 percent after huge drop on Monday

* Energy sector climbs 5.8 percent on stronger oil

* Hopes for U.S. bailout plan boost financial services (Adds details, analyst comments, updates figures)

By Cameron French

TORONTO, Sept 30 (Reuters) - The Toronto Stock Exchange's main index jumped more than 4 percent on Tuesday, recouping more than half the previous day's heavy losses, as energy issues got a boost from crude oil's recovery, while hopes for a revived Wall Street rescue plan calmed investor nerves.

Following a near 7 percent tumble on Monday after U.S. lawmakers rejected a proposed $700 billion bailout for the financial sector, the recovery spanned all 10 TSX subgroups, led by a 5.8 percent surge in energy stocks and a 5.4 percent rise by financial issues.

"Optimism springs eternal I guess, and (the U.S. congressional vote) was pretty close. People probably feel that the next time around it will pass simply because the reasons to vote against it were pretty weak," said John Kinsey, a portfolio manager at Caldwell Securities.

The S&P/TSX composite index .GSPTSE rose 467.83 points, or 4.15 percent, to close at 11,752.90.

Reports that U.S. lawmakers were working to revive the bailout plan drove crude up more than $4 a barrel to above the key $100 level, boosting companies such as Canadian Natural Resources (CNQ.TO: Quote), which rose 11.8 percent to C$73, and Nexen Inc NXY.TO, which gained 10.3 percent to C$24.70.   Continued...