TSX soars 500 points after rate cuts
By Leah Schnurr
TORONTO (Reuters) - The Toronto Stock Exchange's main index surged more than 500 points on Tuesday, ending a five-day plunge, after Canada and the United States cut interest rates to calm worries over the global economic outlook.
In a broad-based advance led by the materials, energy and financial sectors, the index regained more than two-thirds of Monday's 604-point loss as investors took advantage of beaten-down prices.
But the index was still at a level not seen in a year after a nosedive sparked by intensifying fears over the prospect of a U.S. recession and what that could mean for global growth.
An emergency interest rate of 75 basis points cut by the U.S. Federal Reserve on Tuesday, closely followed by a cut of 25 basis points from the Bank of Canada, gave the Toronto benchmark the boost it needed to climb out of a five-session rout.
"Definitely the Fed's emergency rate cut of 75 basis points has proved to be shot in the arm for global markets and investor sentiment," said Elvis Picardo, investment strategist at Northern Securities Inc., in Vancouver, British Columbia.
"But the markets still are quite choppy, there's a lot of nervousness out there and I think the only thing one can predict is the volatility will continue for the foreseeable future."
The S&P/TSX composite index .GSPTSE closed up 508.76 points, or 4.19 percent, at 12,640.89 with all of its 10 sectors on the upside.
The index got big boosts from Fairfax Financial Holdings FFH.TO, which rose C$10.75, or 3.8 percent, to C$296.40, and from Research In Motion RIM.TO, which was up C$8.78, or 10.4 percent, at C$93.28. Continued...