TSX up sharply on stimulus hopes, energy

Wed Jan 28, 2009 6:12pm EST
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By Ka Yan Ng

TORONTO (Reuters) - Toronto's main stock index rose 1.7 percent on Wednesday, led by the heavily weighted financial sector, on hopes that the multibillion-dollar stimulus package unveiled in Tuesday's Canadian budget and further U.S. government action will promote economic stability.

The market saw the United States moving quickly to stabilize its ailing banking sector, which helped to boost U.S. stocks, as lawmakers prepared to vote on a stimulus package to help the recession-hit economy.

Five of Canada's biggest financial institutions were among the top 10 advancers, with the financial group as a whole up 4.7 percent.

Toronto Dominion Bank gained 6.7 percent to C$42.38, while Bank of Nova Scotia rose 5.3 percent to C$31.17. Royal Bank of Canada, CIBC, and Manulife were also big gainers.

"We've got some rather magnificent gains in the financials south of the border and that's following through into Canada. That's the primary driver today," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

The S&P/TSX composite index closed up 1.67 percent, or 146.60 points, at 8,906.23, but off the highs seen after the U.S. Federal Reserve held rates steady and said it was prepared to buy longer-term U.S. government debt.

Eight of the TSX's 10 main groups advanced. The blue chip S&P/TSX 60 index closed 1.96 percent higher at 538.02.

The financials were also supported by plans outlined in Tuesday's federal budget, which won key backing from the Opposition Liberals on Wednesday. The government said it would commit C$50 billion more to a program that buys insured mortgages and would also give itself the authority to inject capital into banks and financial companies that need support.   Continued...

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