February 5, 2009 / 5:48 PM / 10 years ago

CANADA STOCKS-TSX rises as gold price up, financials rebound

* Materials group leads TSX higher as gold price up

* Financials rebound, up 1.3 percent at midday

* Bombardier down, Magna up after layoff announcements (Recasts, adds quote, details, updates figures)

By Ka Yan Ng

TORONTO, Feb 5 (Reuters) - Toronto’s main stock index was higher at midday on Thursday, lifted by strength in mining companies as gold prices got a boost from safe-haven buying, while financials shares rebounded on hope for the U.S. banking sector.

The resource-laden materials group rose 2.9 percent and led the index higher. Among gainers were miners Barrick Gold (ABX.TO), up 2.8 percent at C$47.00, and Kinross (K.TO), up 3.3 percent at C$22.19.

“Gold appears to be the one bright spot in the market again,” said Michael Sprung, president at Sprung & Co. Investment Counsel.

The big financial services sector also helped the index, fighting back from an earlier drop of 1.6 percent. At midday it was up 1.3 percent.

The rebound in financial shares occurred as U.S. stocks hit a session high, with traders citing speculation about changes to mark-to-market accounting rules, a requirement for recognition of losses that has resulted in billions of dollars of writedowns for U.S. banks. [ID:nN05504658]

Royal Bank of Canada (RY.TO) rose 2.1 percent to C$31.25.

Canadian financials have been pressured by “extreme negative sentiment on the U.S. financials side,” said Vincent Delisle, strategist at Scotia Capital, in Montreal.

“Investors are still very uncertain, uncomfortable and scared of a worst-case scenario,” he said.

At 12:18 p.m. (1718 GMT), the S&P/TSX composite index .GSPTSE was up 104.26 percent, or 1.2 points, at 8,797.35, with nine of its 10 main groups higher.

In the morning, anxiety ahead of Friday’s January jobs reports from Canada and the United States had weighed on financials, which had helped to push the S&P/TSX composite down by nearly 1 percent.

Auto-parts maker Magna International MGa.TO and plane and train maker Bombardier (BBDb.TO) were among several Canadian companies to announce layoffs.

Bombardier was down 2.2 percent at C$3.64 after it said it plans to cut more than 1,300 jobs as it braces for a 10 percent drop in business jet orders. [ID:nN05358628]

Magna was up 2.6 percent at C$36.69 after it said it would shut a plant in Syracuse, New York, which will ultimately eliminate 1,400 jobs. [ID:nN04307557]

“Jobs are going to front and center for the next while. The economy is still in a deteriorating phase and job losses are likely to grab headlines for the next while and I think the market is going to react negatively to those,” Sprung said.

The oil and gas group rose 0.24 percent, even as the price of crude dropped to around $40 a barrel. Husky Energy (HSE.TO) fell 2.5 percent to C$29.17 as Canada’s No. 2 oil producer and refiner reported a drop in quarterly results and chopped its dividend. [ID:nN04293772]

In individual company news, Certicom Corp (CIC.TO) said Research In Motion’s RIM.TO C$3-a-share sweetened takeosver offer for the electronic security company is a superior bid to a previous bid from VeriSign Inc (VRSN.O). [ID:nN05346516]

Certicom rose 1.6 percent to C$3.21, while RIM rose 0.74 percent to C$69.61.

Brookfield Properties BPO.TO, one of Manhattan’s biggest landlords, reported a small increase in quarterly funds from operations, while net income jumped due to a gain. Brookfield was up 16.9 percent at C$7.48. [ID:nN05260949] ($1=$1.23 Canadian) (Additional reporting by Jennifer Kwan; editing by Peter Galloway)

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