TORONTO (Reuters) - The Toronto Stock Exchange’s main index surged on Wednesday in a broad rally led by resource and banking shares, pulling away from bear market territory after a week-long slide.
After falling for five out of six sessions, the index bounce-back was helped by bargain-hunting in oil and other commodity-related stocks.
Among oil gainers Canadian Natural Resources (CNQ.TO) rose 6.2 percent to C$79.00, and among miners Inmet Mining IMN.TO was up 8.4 percent at C$54.00.
“I think this suddenly looks like an oversold bounce that’s being led by some of the biggest market leaders that had the biggest drops in the past six days,” said Elvis Picardo, an independent strategist in Vancouver, British Columbia.
“This selloff has been very sharp and bounces like this have to be expected, I don’t think the fundamental picture has changed,” he said.
Research In Motion RIM.TO was among the biggest gainers after it said it is launching a flip version of its BlackBerry Pearl smartphone. RIM was up 6 percent at C$112.36.
The S&P/TSX composite index .GSPTSE closed up 350.39 points, or 2.88 percent, at 12,497.15 with all of its 10 main sectors rising.
Despite the day’s surge, the benchmark index remains down more than 9 percent since September 2, diving on worries over slowing global growth and the impact the slowdown will have on the demand for commodities.
The selloff pushed the market within striking distance of official bear territory, and at Tuesday’s close the index was down more than 19 percent from the high it reached in June. A bear market is generally defined as a 20 percent drop from the peak.
On Wednesday, the benchmark closed 17 percent below June’s closing high.
“I think it’s a little too early to really put the pin in on this but with a little luck, if we find a couple of good days of stability, maybe the market can get some traction and work its way a little bit higher,” said Rick Hutcheon, president and chief operating officer at RKH Investments.
Leading the way, the energy and materials sectors gained 4 percent and 3.9 percent respectively. Fertilizer producer Potash Corp of Saskatchewan (POT.TO) gained 2.2 percent to C$153.59, while EnCana (ECA.TO) was up 3.1 percent at C$69.18.
OPEC unexpectedly cut production but oil prices still slipped on weak demand and a strong U.S. dollar. Crude settled down 68 cents at $102.58 a barrel.
Banks also lifted the index on continued optimism over the U.S. mortgage company bailout plan. Bank of Montreal (BMO.TO) climbed 1.6 percent to C$48.56, and Bank of Nova Scotia (BNS.TO) was up 1.7 percent at C$47.63. Overall, the sector rose 2.5 percent.
Shares of Transat AT TRZb.TO slid 3.5 percent to C$17.30 after the holiday travel firm reported a third-quarter loss, stung by rising fuel costs. See: <ID:nN10361051>.
Market volume was 540 million shares worth C$9.1 billion. Advancers outpaced decliners 813 to 736. The blue chip S&P/TSX 60 index .TSE60 closed 22.35 points, or 3.09 percent, higher at 746.81.
On Wall Street, stocks gained as OPEC said it would cut production, driving up energy shares.
The Dow Jones industrial average .DJI rose 38.19 points, or 0.34 percent, to 11,268.92, while the Nasdaq Composite Index .IXIC ended up 18.89 points, or 0.85 percent, at 2,228.70.
Editing by Peter Galloway