TORONTO (Reuters) - Toronto’s main stock index closed at its highest level in more than a week on Monday in a broad-based rally supported by a rebound in oil prices and optimism that stimulus measures around the globe would help avert a deeper slide in the economy.
The resource-heavy index, coming off a 12 percent skid last week, surged at the open and hung on to the bulk of its gains as the price of oil bounced off the four-year low set last week.
Adding to the rally’s momentum was a pledge by U.S. President-elect Barack Obama to invest in a massive infrastructure plan to help bolster the anemic U.S. economy.
Stock markets around the world rebounded on Monday, helped by several governments reinforcing their plans for countering the global economic crisis, while higher oil prices gave an added boost to stock indexes that have a heavy energy weighting.
“For the first time in a long time commodities are actually showing signs that they actually have a pulse,” said Levente Mady, broker at MF Global Canada in Vancouver. “So commodities and equity markets are the two worlds that are kind of helping the TSX pop up substantially more than the U.S. and some of the other markets.”
The Toronto Stock Exchange’s S&P/TSX composite index closed 450.09 points, or 5.55 percent, higher at 8,567.12, with all of its 10 main sectors up.
A 7 percent surge in oil prices following a 25 percent drop last week helped light a fire under the index’s heavily weighted energy sector, which finished the session 7.45 percent higher.
Deepening supply cuts from oil supplier Saudi Arabia and prospects that the Organization of the Petroleum Exporting Countries will agree to further trim output fueled the rise.
Shares of oil company EnCana Corp shot 9.34 percent higher to C$55.61 and were the biggest driver of the TSX’s gain. Suncor Energy rallied 6.59 percent to close at C$23.30.
Reporting by Frank Pingue; editing by Peter Galloway