TORONTO (Reuters) - Canada's resources-heavy stock market, which has struggled to gain traction in 2013, is expected to kick into gear in the second half of the year as the global economy rebounds, a Reuters poll found.
The median forecast in a poll of 40 market strategists, taken in the past week, shows the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE is expected to end the year at 12,850, up 5 percent from Monday's close of 12,288.90.
It will then rise to 13,500 by mid-2014 - a level not seen since mid-2011.
The year-end projection was scaled down from the 13,450 forecast in a March poll as recent sell-offs wiped out the market's early 2013 gains.
But the more recent poll showed analysts forecast a late recovery in the sagging market, which has trailed global peers including Wall Street.
The Toronto market has shed about 1 percent this year, while the S&P 500 .SPX has gained about 15 percent.
"Overall it's really going to boil down to the global growth story," said Craig Fehr, Canadian market strategist at Edward Jones. "We're starting to see some semblance of stabilization on the global stage, in terms of economic growth."
The TSX will benefit from export demand as confidence builds "around the ability for China to stimulate growth and for Europe to pull itself out of recession," he added.
The Toronto index was hit by a slow, grinding global economic recovery that has muted commodity prices, hurting profits at Canadian mining, energy and other natural resource companies.
More recently, signs of a stronger U.S. economy triggered concerns that global central banks might pare back on their aggressive efforts to boost growth.
Following their slump, some analysts polled say materials and energy stocks might have hit bottom and these groups will contribute to growth.
"The majority of the downside in both these sectors is over," said Brian Belski, chief investment strategist at BMO Capital Markets. "(The resource group) is just going to be a volatile asset and it's going to be all about stock picking."
Bob Gorman, chief portfolio strategist at TD Wealth, said extremely low expectations for resource stocks could spur outperformance and predicted they will pick up and narrow the gap between the U.S. and Canadian markets.
Analysts said the lower stock prices in the Canadian market make valuations attractive.
Given its sluggish performance "the upside potential for the index is certainly greater than the downside risk," said Elvis Picardo, strategist at Global Securities.
"Based on the assumption there's no big resurgence in macro risk and based on the assumption the gradual growth scenario continues, we expect TSX to outperform the S&P 500 by virtue of the fact that it has done nothing for the last two years."
Additional polling by Ashrith Doddi and Snehasish Das; Editing by Jeffrey Hodgson and Chizu Nomiyama