* China stimulus package lifts equities, commodities
* Energy, materials lead index higher
* Nortel cuts 1,300 jobs, posts loss; shares down 13 pct
* Air Canada extends losses, down 12 pct
TORONTO, Nov 10 (Reuters) - The Toronto Stock Exchange’s main index was up 1.9 percent on Monday morning in line with other world markets, boosted by the big stimulus package announced by China on the weekend.
Global stock and commodity markets surged in reaction to China’s plan to pump nearly $600 billion into its economy as G20 finance ministers pledged on the weekend to take measures to fight global recession and revive financial markets.
“That’s put a nice bit in the teeth for commodities and that obviously spills right over into Canada with our large exposure to commodities,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
“That’s what the market needs, a sense of global coordination, not only lowering interest rates but also a fiscal plan.”
But he cautioned that there are still many headwinds with the ongoing financial crisis and global economic slowdown that could reverse sentiment.
“This could be a very short-term rally,” he added.
Shortly after 11:05 a.m. (1605 GMT), the S&P/TSX composite index .GSPTSE was up 183.45 points, or 1.9 percent, at 9,779.66. The index had gained more than 3 percent in early dealings. Eight of its 10 main groups were higher.
Commodities benefited from the China stimulus plan and the energy and materials groups led the broad advance, up 3.23 percent and 4.22 percent respectively. However, gains were trimmed as oil moved off session highs to above $61 a barrel, while gold and copper remained firm.
Miners benefited from a push higher by metals prices, and some issues were also supported by the release of a draft mining law in Ecuador. The new mining law is key for foreign miners, including Canada’s Corriente Resources CTQ.TO and Iamgold (IMG.TO), which have found big gold and copper deposits in souther Ecuador. [ID:nN10428242]
Iamgold was up 5.5 percent at C$4.40, while Corriente was up 0.7 percent at C$2.96.
The information technology group was pulled down by Nortel Networks Corp NT.TO. Nortel fell 13.4 percent to C$1.29 as North America’s biggest maker of telephone gear reported a big quarterly loss and announced a round of cost-cutting that includes laying off 1,300 more people. [ID:nN10442062]
“They seem to be hostage to the global economy and that doesn’t look good at this point in time,” Nakamoto said.
Nortel also said it would suspend dividends on two series of preferred shares and cut its 2008 outlook again as telecommunications companies reduce spending on the equipment it makes.
Thompson Creek TCM.TO, one of the most heavily-traded issues, was up 4 Canadian cents at C$4.28 as the molybdenum miner said recently it will delay one mining project and could slow another due to tough market conditions. Several brokers cut their share price target on the company on Monday. [RCH/CA]
Canada’s biggest airline Air Canada ACa.TO, extended losses from last week, off 14.25 percent at C$3.85, with its liquidity in the spotlight following its quarterly results report. Several brokers also cut share-price targets on Air Canada, and Raymond James, which is bearish on the Canadian airline sector, recommended investors avoid Air Canada shares. [ID:nWNAB0596]
WestJet Airlines (WJA.TO), Air Canada’s main competitor, was unchanged at C$10.65 after it reported a 28-percent skid in quarterly profit. [ID:nN10393518] ($1=$1.19 Canadian) (Reporting by Ka Yan Ng; Editing by Peter Galloway)