October 28, 2008 / 12:57 PM / 9 years ago

Resources bounce-back helps spur big rally

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

TORONTO (Reuters) - The Toronto Stock Exchange’s main index surged on Tuesday as investors flocked to commodity and financial stocks that were beaten down in Monday’s steep fall, encouraged by strong earnings from several companies, including Rogers Communications Inc.

Among heavily weighted stocks that led the market higher were insurer Manulife Financial Corp, which rose 11 percent, oil company EnCana Corp, which was up 8.7 percent, and Barrick Gold, which rallied 12.5 percent on a firmer bullion price.

Shares of Rogers, the country’s biggest wireless service provider, rose 10 percent to C$32.00 after it said quarterly profit jumped 84 percent, helped by sales of Apple’s iPhone.

TransCanada Corp rose 5.6 percent to C$34.44 after it posted a 20 percent profit rise.

The market got a boost from strong earnings, said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

“We’ve had pretty strong numbers from some bellwether companies like Rogers and TransCanada,” he said. “That may give investors some comfort that the earnings situation is not as bleak or as dire as some expected earlier this month.”

He added: “This frenetic trading is very largely sentiment driven. It’s a couple of good earnings from bellwether companies. A very large part of the sentiment is the feel good factor coming from the U.S. today.”

U.S. stocks also charged back on Tuesday with the Dow Jones industrial average up more than 10 percent, and Nasdaq up more than 9 percent, on bargain-hunting and hopes the U.S. Federal Reserve and other central banks will cut rates further.

The S&P/TSX composite index closed up 614.29 points, or 7.20 percent, at 9,151.63, with all of its 10 main groups higher. On Monday, the index logged its second biggest percentage drop ever, behind an 11.3 percent drop in October 1987.

Materials rose 9.8 percent as metals prices were firm with Barrick Gold up 12.5 percent at C$25.32.

The oil and gas sector gained 7.7 percent, even though the price of oil turned negative to settle down at $62.73 a barrel.

The financials group rose 7 percent on hopes the U.S. Federal Reserve will cut rates further on Wednesday to stimulate economic activity. Manulife Financial climbed 11 percent to C$23.49.

After the market close on Tuesday, Canada’s insurance regulator said it will ease guidelines on the capital that insurers need to set aside for guaranteed payments on segregated funds, lifting a concern that weighed on their share prices during the recent equities market plunge.

The benchmark index has fallen 22 percent this month, with volatility at extreme levels.

“Markets never go in a straight line and we got some exhaustion on the sell side,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.

“I think we’ll probably see the market try to rally for a couple of days.”

Market volume was 609.1 million shares worth C$6.82 billion. Advancers outpaced decliners 862 to 725. The blue chip S&P/TSX 60 index closed 41.34 points higher, or 8.1 percent, at 554.58.

The Dow Jones industrial average rose 889.35 points, or 10.9 percent, at 9,065.12, while the Nasdaq Composite Index ended up 143.57 points, or 9.53 percent, at 1,649.47.

($1=$1.27 Canadian)

Reporting by Jennifer Kwan; Editing by Peter Galloway

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