September 12, 2008 / 3:33 PM / 10 years ago

UPDATE 1-Toronto stocks rise as commodities show strength

*Oil up on fears Hurricane Ike will damage U.S. refineries

*Gold, base metals track oil’s rise, weaker U.S. dollar

*Financial stocks slip as market frets over Lehman

(Adds details)

TORONTO, Sept 12 (Reuters) - Strength in commodities powered the Toronto Stock Exchange’s main index higher on Friday morning, but worries over the fate of Lehman Brothers Holdings Inc LEH.N lingered around financial shares.

The heavily weighted energy sector rose 2.6 percent as crude oil firmed to around $102 a barrel on concerns Hurricane Ike could threaten Gulf coast oil refineries. Husky Energy Inc (HSE.TO) rose 2 percent to C$42.93.

Also, Husky and several other companies won development rights to explore for gas off the coast of Labrador, the Canada-Newfoundland and Labrador Offshore Petroleum Board said.

The resource-laden materials group rose 5.2 percent on stronger gold and base metals prices. First Quantum Minerals (FM.TO) was up 7 percent at C$52.55, while Potash Corp of Saskatchewan Inc POT.TO , the world’s biggest fertilizer maker, climbed 4.5 percent to C$169.23.

“The U.S. dollar is weak and that makes commodity prices higher,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.

The S&P/TSX composite index .GSPTSE was up 102.84 points or 0.82 percent, at 12,715.60, extending its win streak for a third day after opening lower. Three of its 10 main groups were higher.

Worries over slowing growth and demand for resources continues to worry the market, analysts say, but investors have shrugged off those concerns as they see value after a week of sharp declines.

Financials slipped 1.2 percent with Canadian Imperial Bank of Commerce (CM.TO) down 0.8 percent at C$63.66.

Investors were cautious as they awaited the word on the fate of Lehman Brothers after a tumble in its stock put its survival in question. For details, see [ID:nSP6809].

Concerns heightened after Lehman reported a big quarterly loss and failed to attract investors to shore up its capital position.

U.S. and Canadian economic news is also causing anxiety in the sector, Ketchen said.

In Canada, weak exports meant industries ran at just 78.9 percent of their capacity in the second quarter of this year, the lowest level in 16 years and down from 79.6 percent in the first quarter, Statistics Canada said on Friday. [ID:nN12517318]

“That’s giving you an indication that there is some slippage in economic growth,” Ketchen said.

BMO Capital Markets lowered its 12-month target price for the S&P/TSX composite index to 15,000, as it cut its earnings view for companies on the index due to an overall slump in commodity prices. [ID:nBNG355693]

In company news, manufacturing and industrial equipment maker ATS Automation Tooling Systems Inc (ATA.TO) signed a deal to sell its precision components group to a group led by current management, and said it expects to complete the sale in the third quarter. ATS rose 9.7 percent to C$8.49. ($1=$1.06 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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