TSX hits 6-week high on Petro-Canada, U.S. bank plan

Mon Mar 23, 2009 5:01pm EDT
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By Frank Pingue

TORONTO (Reuters) - Toronto's main stock index surged more than 5 percent on Monday to its highest close in six weeks as a massive takeover of Petro-Canada and a U.S. plan to rid banks of toxic assets helped boost sentiment.

Energy shares raced higher as the price of oil, a key Canadian commodity, hit a three-month high, while Suncor Energy Inc agreed to buy rival Petro-Canada for C$18.43 billion.

Shares of Petro-Canada, a key contributor to the Toronto market's gain, soared 20.4 percent to C$35.70, while EnCana Corp jumped 8 percent to C$55.50.

Another key factor behind the gains was the U.S. plan to buy up to $1 trillion in toxic financial assets, a move that will be critical to hopes for a U.S. economic recovery.

"This is the most credible plan I've seen from the U.S. Treasury to date and it looks like the private sector and the stock market is buying into it," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier. "For me, this is some validation that there is some meat on the bones here."

The Toronto Stock Exchange's S&P/TSX composite index rose 452.16 points, or 5.32 percent, to close at a session high of 8,958.51.

All 10 of the TSX's sectors ended comfortably higher. The financials index led with a 8.9 percent gain, while the energy group followed with a rise of 7.4 percent.

Shares of Canadian banks and insurers followed their U.S. counterparts higher as the U.S. bailout plan helped boost optimism about a revival in U.S. bank lending, and the sentiment spilled over to Canada.   Continued...

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