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TORONTO (Reuters) - Toronto's main stock index rebounded strongly on Wednesday after three days of losses, posting its biggest gain in more than a week as commodities rallied and U.S. economic data came in better than expected.
Leading the market higher were battered energy shares as U.S. oil futures settled more than 5 percent higher, boosted by a big drawdown in domestic crude stocks and the positive economic data.
Suncor Energy surged 8.1 percent to C$27.50 and Canadian Natural Resources jumped 6.2 percent to C$30.68.
All 10 TSX index sectors were firmer as the resource-heavy Canadian market outperformed its U.S. counterparts, catching up after recent underperformance. Among the standouts were financial shares with Bank of Nova Scotia adding 3.1 percent to C$51.74.
"I think investors are taking some comfort from the last rebound in the major market indexes yesterday," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. Wall Street stocks pushed into positive territory late on Tuesday after plunging early in the day but the TSX stayed negative.
News that European leaders have agreed to examine ways to shore up troubled euro zone banks helped lift sentiment.
The Toronto Stock Exchange's S&P/TSX composite index closed up 279.31 points, or 2.5 percent, at 11,457.22.
The TSX had lost more than 500 points since Friday, plunging to a 23-month low on Tuesday before it cut losses.
"We're in an environment where the market is extremely oversold. My guess is we're still in a declining market, we're still in a bear market," said John Johnston, chief strategist at Davis-Rea.
Ron Meisels, technical analyst and president at Phases & Cycles in Montreal, said Tuesday probably marked an important low on the TSX as no individual stocks hit 52-week highs.
Research In Motion jumped 10.3 percent on Wednesday to C$24.49 on takeover speculation a day after the BlackBerry maker's stock fell below $20 for the first time in almost six years.
Also gaining were gold miners as bullion prices turned higher after dropping below $1,600 an ounce. Among them, Goldcorp was up 3.1 percent at C$47.38.
On the downside, Talisman Energy lost 3.3 percent to C$11.75 after TD Securities cut its price target for the stock.
Editing by Peter Galloway