Commodities and Fed rate cut spur big TSX gain

Wed Oct 29, 2008 5:38pm EDT
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By Jennifer Kwan

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.   Continued...

<p>People walk by a Bay Street sign inside the financial district in Toronto October 10, 2008. REUTERS/Mark Blinch</p>