TORONTO (Reuters) - The Toronto Stock Exchange’s main index closed 3.8 percent higher on Wednesday as energy and materials issues rose on stronger commodity prices, with the gains supported by the U.S. Federal Reserve’s half-point interest rate cut.
Leading the way were oil company EnCana Corp, which rose 6.7 percent to C$59.20, and insurer Manulife Financial, which was up 7.7 percent at C$25.30.
The market was encouraged by the U.S. central bank’s interest rate move, which took its key rate down to 1 percent, in an attempt to stimulate the economy.
“The real big story has been the rate decrease in the States,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
“With the rate decrease it affects the (U.S.) dollar. If the dollar goes down, oil goes up -- they are inversely related -- so that has been helping to push the market up in Toronto,” Ibel said.
The S&P/TSX composite index was up 349.93 points, or 3.82 percent, at 9,501.56, extending the 7.2 percent gain it logged on Tuesday. Eight of its 10 main groups were higher.
The heavily-weighted energy sector rose 8.6 percent as the price of crude rose above $67 a barrel [ID:nN29500128].
Nexen Inc climbed 14.5 percent to C$18.60 after Canada’s No. 4 independent oil explorer said quarterly profit more than doubled, beating market expectations.
The materials group climbed 10.9 percent as gold and base metals prices rose. Agnico-Eagle rose 8.9 percent to C$33.31, while Barrick Gold soared 10.2 percent to C$27.90.
The rally in resource issues comes as investors shopped for beaten-down stocks, analysts say.
“It’s a move back to more risky assets,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
The financial services sector climbed 1.2 percent, helped by Manulife after Canada’s insurance regulator eased guidelines on capital requirements related to segregated funds.
Elsewhere, BCE Inc was down 1.7 percent at C$34.37, after it posted a lower quarterly profit, due mostly to restructuring charges.
Maple Leaf Foods rose 3.2 percent to C$7.40. Earlier, the company posted a quarterly loss as charges mounted from a recall of tainted meat that the company said was now complete.
Market volume was a hefty 609.1 million shares worth C$6.82 billion. Advancers outpaced decliners 863 to 725. The blue chip S&P/TSX 60 index closed 21.63 points higher, or 3.9 percent, at 576.21.
South of the border, the Dow Jones industrial average fell 74.16 points, or 0.82 percent, at 8,990.96, while the Nasdaq composite index ended up 7.74 points, or 0.47 percent, at 1,657.21.
Reporting by Jennifer Kwan; editing by Rob Wilson