March 4, 2009 / 10:00 PM / 10 years ago

CANADA STOCKS-TSX rides oil and China hopes to higher close

* TSX closes 2.4 percent higher at 7,814.75

* Ends three-session losing skid

* Energy shares surge 6.59 percent to lead rally (Adds comments, details)

By Frank Pingue

TORONTO, March 4 (Reuters) - Toronto’s main stock index pushed higher on Wednesday as talk of new stimulus measures in China help lift oil prices and lit a fire under energy shares.

The 2.4 percent rally ended a three-day losing streak, and allowed the TSX to reclaim some value lost when it skidded to its lowest level since October 2003 on Tuesday.

Shares of EnCana Corp (ECA.TO), Canada’s biggest energy company, headlined gains, rising 6.1 percent to C$50.27. Suncor Energy (SU.TO) closed 7.9 percent higher at C$26.99.

The surge by energy issues matched a rally in the price of oil, a key Canadian export, after manufacturing data from China, the world’s No. 2 oil consumer, sparked hopes for an economic recovery there. An unexpected drop in U.S. crude stocks also helped support the higher 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 Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE rose 183.13 points, or 2.4 percent, to close at 7,814.75. It had shed nearly 7 percent over the previous three sessions.

The energy group led all sectors with a 6.59 percent gain, while the heavily weighted financial index followed with a gain of 2.53 percent. Seven of the TSX’s 10 sectors ended the session higher

The price of gold fell as demand for safe-haven investments dwindled in the latest session, which stripped the materials sector of 2 percent of its value to cap the index’s gain.

Barrick Gold (ABX.TO) dropped 3.98 percent to C$35.25, while Goldcorp (G.TO) skidded 2.77 percent to C$35.42.

Entering the latest session, the main Toronto index was down 15 percent on the year and nearly 50 percent from its 2008 high, reached in June.

“It was due for a rebound,” said Graham. “We’ve had the good news that China is prepared to keep spending and that’s obviously good news for commodities.”

$1=$1.27 Canadian Additional reporting by Jennifer Kwan; editing by Rob Wilson

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