October 30, 2008 / 12:58 PM / 9 years ago

Commodities boost TSX for third day

TORONTO (Reuters) - The Toronto Stock Exchange’s main index jumped more than 3 percent on Thursday, its third straight day of healthy gains, led by commodity issues as market sentiment remained buoyant after Wednesday’s rate cut by the U.S. Federal Reserve.

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

Heavily weighted stocks that led the market higher included EnCana Corp ECA.TO, up 5.9 percent at C$62.70, Canadian Natural Resources (CNQ.TO), up 7.02 percent at C$62.34, and Royal Bank of Canada (RY.TO), up 4.7 percent at C$47.58,.

“It’s a carry through of some of the relief in the market from the rate cut yesterday, suspecting that might help to boost the economy a little bit,” said Michael Sprung, president at Sprung & Co. Investment Counsel.

“Therefore the price of oil and commodities might not get as depressed as feared before,” he said.

“We might be seeing the market exhibiting a little bit more stability here and perhaps some of the extreme volatility that has been so characteristic of the market in October is beginning to dissipate,” Sprung added.

The S&P/TSX composite index .GSPTSE closed up 354.65 points, or 3.73 percent, to 9,856.21, with all of its 10 main groups higher.

Also providing some support was preliminary data that showed U.S. third-quarter gross domestic product shrank less than forecast by economists.

“The GDP number, if they had been disastrous, would have been a different story,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

“But certainly from a macro perspective the fact that U.S. markets are stabilizing is a very big positive.”

The data comes a day after the U.S. central bank cut rates by 50 basis points to 1 percent in a bid to stimulate the economy.

The composite’s rise builds on two straight days of gains as investors have started to move back into riskier assets, which could be a sign that the market may be ready to climb even higher after the extreme volatility of recent weeks, analysts say.

The TSX is down 16 percent so far this month.

The materials sector was up 5.7 percent on Thursday with top gold producer Barrick Gold (ABX.TO) up 7.1 percent at C$29.88. Earlier Barrick reported a drop in third-quarter profit.

Energy issues rose 5 percent with Imperial Oil (IMO.TO) up 5 percent at C$42.00 after the country’s largest oil producer and refiner reported a surge in quarterly profit.

Despite the cheer on the TSX, demand fears pushed the price of gold [ID:nN30584211] and oil down.

The heavily weighted financial services sector rose 2.5 percent with Great-West Lifeco (GWO.TO) up 0.23 percent at C$25.75. The big insurer reported a lower quarterly profit in part on charges related to impaired assets.

Market volume was 622.05 million shares worth C$8.22 billion. Advancers outpaced decliners 1,067 to 486. The blue chip S&P/TSX 60 index .TSE60 closed up 23.36 points, or 4.05 percent, at 599.57.

The Dow Jones industrial average .DJI rose 189.73 points, or 2.11 percent, at 9,180.69, while the Nasdaq Composite Index .IXIC ended up 41.31 points, or 2.49 percent, at 1,698.42.

($1=$1.20 Canadian)

Reporting by Jennifer Kwan; editing by Richard Valdmanis

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