Toronto stocks soar as U.S. bailout hopes revive

Tue Sep 30, 2008 5:52pm EDT
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By Cameron French

TORONTO (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 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, which rose 11.8 percent to C$73, and Nexen Inc, which gained 10.3 percent to C$24.70.

Among financials, Bank of Montreal led the way, rising 9.4 percent to C$45.95, while Canadian Imperial Bank of Commerce jumped 7.4 percent to C$61.08.

Plane and train builder Bombardier jumped 12.9 percent to C$5.78, leading industrials up 4.5 percent.

Analysts said some of the bounce could be attributed to bargain hunters rushing in for quality stocks, and also to buying associated with fund managers rebalancing their portfolios ahead of the end of the quarter.   Continued...

<p>A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch</p>