* Key Toronto index closes 2.4 percent higher
* Energy shares surge 6.59 percent to lead TSX rally
* TSX rally comes on heels of steep Tuesday skid (Adds comments, details and official numbers)
By Frank Pingue
TORONTO, March 4 (Reuters) - Toronto’s main stock index closed higher on Wednesday as talk of new stimulus measures in China lifted oil prices and lit a fire under energy shares.
The 2.4 percent rally gave the index its first higher close in four sessions and allowed it to reclaim the value it lost when it tumbled to its lowest level since Oct. 2003 on Tuesday.
Shares of EnCana Corp (ECA.TO), Canada’s biggest energy company, headlined the index’s gain as its shares rose 6.1 percent to C$50.27, followed by Suncor Energy (SU.TO), which closed 7.9 percent higher at C$26.99.
The surge in energy shares came alongside a rally in the price of oil, a key Canadian export, after manufacturing data from China, the world’s No. 2 oil consumer, sparked hope of an economic recovery there. An unexpected drop in U.S. crude stocks also helped support the surge in oil prices.
Talk that China would increase spending in areas such as infrastructure and manufacturing, on top of a $585 billion stimulus package unveiled in November, also helped Toronto’s resource-heavy index. [ID:nBJC000263]
“Everybody has jumped on to (China) going well and if that’s the case that will help commodity prices,” said Gavin Graham, Director of Investments at BMO Asset Management. “That is obviously good news for Canada because we have 50 percent of our market in resources, or thereabouts.”
The S&P/TSX composite index .GSPTSE rose 183.13 points, or 2.4 percent, to close at 7,814.75. It shed nearly 7 percent over the past three sessions.
$1=$1.27 Canadian Additional reporting by Jennifer Kwan; editing by Janet Guttsman