Toronto stocks make record gain on crisis hope

Tue Oct 14, 2008 5:32pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Toronto Stock Exchange's main index closed with a huge gain on Tuesday but the rise paled against the record-setting surge it started the day with as it played catch-up with Wall Street's big rally on Monday, when Canadian markets were closed.

The benchmark index soared more than 1,600 points, or 18 percent, to its biggest gain ever shortly after the market opened, following big rises on world stock markets on Monday as investor jitters about the stability of the financial system eased.

Canadian markets were closed on Monday for the Thanksgiving Day holiday.

On Tuesday, markets also cheered a U.S. plan to inject $250 billion into banks, following similar measures in Europe, a move designed to get banks lending to each other again.

As the day progressed, the euphoria faded a bit and the S&P/TSX composite index pared its gains and closed up 890.50 points, or 9.82 percent, at 9,955.66. All of its 10 sectors were higher.

"We've had a very traumatic experience as investors over the last week where we've had markets that have been cratering day after day," said Rick Hutcheon, president and chief operating officer at RKH Investments. "We've had dramatic worldwide central bank intervention into the capital markets at an unprecedented level."

"Now the focus is going to turn to how deep that valley is for the world economic situation. I don't believe this will be a V-bottom. This will be a protracted U. What's really critical here is that sentiment and confidence and stability and rationality return to the market."

U.S. stocks, which rose at the open, ended down as investors focused on a dismal outlook for earnings and the economy.   Continued...

<p>A Bay Street sign is seen at the financial district in Toronto, October 10, 2008. REUTERS/Mark Blinch</p>