February 6, 2009 / 10:24 PM / 10 years ago

CANADA STOCKS-TSX up as dark data shines light on stimulus

* TSX touches highest level since Jan. 9

* Stock gains fueled by hopes for U.S. stimulus plan

* Canadian and U.S. economies bleed jobs in January (Adds details, quote)

By Jennifer Kwan

TORONTO, Feb 6 (Reuters) - Toronto’s main stock index closed higher for a fourth straight session on Friday in a broad rally as dismal U.S. jobs data fueled hopes for a U.S. stimulus package to help combat the recession.

The index finished the week up 3.6 percent, rising for a second consecutive week and recording the strongest weekly increase since mid-December.

The three pillars of the index kept the market higher with the materials sector up 2.2 percent, and financials up 1.8 percent. The energy sector rose 1.6 percent.

Key stocks on the upside included fertilizer company Potash Corp of Saskatchewan POT.TO, up 4.4 percent at C$110.80, Manulife Financial (MFC.TO), which rose 4.02 percent to C$21.23, and Suncor Energy (SU.TO), up 3.4 percent at C$25.49.

Much of the optimism focused on Washington’s stimulus package and a plan, expected to be announced on Monday, to rescue the ailing banking sector. [ID:nN05403943]

Boosted by that optimism, the market pierced the key 9,000 resistance level, said Francis Campeau, broker at MF Global Canada, in Montreal.

“Technicals look a bit better so I think there is a momentum and technical buying going on,” he said.

The S&P/TSX composite index .GSPTSE closed up 147.04 points, or 1.66 percent, at 9,008.02, with eight of its 10 main groups higher. Earlier, the index touched a high of 9,102.00, the highest level since Jan. 9.

The consumer staples and health care sectors dropped 1.4 percent and 0.8 percent, respectively.

The rally came as U.S. job losses accelerated in January, the most severe monthly loss since December 1974, adding to evidence that the economy is in urgent need of stimulus. [ID:nN06462826]

In Canada, January data showed the economy suffered its worst job losses in more than three decades. [ID:nN06253705]

Resource stocks rose even though gold prices [ID:nL6618939] were weaker and the price of oil CLc1 settled down $1 at $40.17 on U.S. demand concerns. Base metals were largely higher.

The mining sector soared 5.9 percent as strength in the price of copper helped to lift other base metals on optimism that China, the world’s biggest user of copper, may soon see the start of an economic recovery. [ID:nL6575385]

In recent sessions, stocks and their underlying commodity prices have occasionally moved in opposite directions, which could be a sign the market is trying to price in the prospect of recovery, analysts said.

“Perhaps all the negativity is baked into the market,” said Irwin Michael, portfolio manager at ABC Funds. “The market was due for a snapback.”

He cautioned, however, that the market’s downward trend may not be over yet.

Among miners, Teck Cominco TCKb.TO rose 5.8 percent to C$5.29, while FNX Mining FNX.TO climbed 2.2 percent to C$4.19.

Elsewhere, tech bellwether Research In Motion RIM.TO rallied 3.1 percent to C$72.10, helping to push up the technology sector by 2.8 percent.

$1=$1.22 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway

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