September 12, 2008 / 9:19 PM / in 9 years

UPDATE 3-Toronto stocks rise as resources offset Lehman woe

*TSX climbs as resource shares rise with commodities

*Financials fall on worries over outlook for Lehman

*Index loses 0.4 percent for the week

(Adds details, quotes)

By Leah Schnurr

TORONTO, Sept 12 (Reuters) - The Toronto Stock Exchange’s main index pushed higher on Friday as rallying resources overshadowed worries over the future of U.S. investment bank Lehman Brothers that have weighed on the market’s financial sector.

A modest increase in the price of oil and gains in gold and other metals prices buoyed the energy and materials sectors, which had been hard hit in the index’s recent steep selloff.

Among the biggest gainers, fertilizer firm Potash Corp of Saskatchewan POT.TO rose 6.3 percent to C$172.22, while miner Agnico-Eagle Mines AEM.TO was up 15.9 percent at C$56.14.

But the large financial sector slipped as it was bogged down by concern that Lehman LEH.N may fail to find a buyer because the U.S. government is reluctant to offer up financial backing. For details see: [ID:nSP6809].

Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc., in Vancouver, British Columbia, said that anxiety over the stability of Lehman speaks to the wider fears of ongoing fallout in the financial system from the credit crunch.

“It would really be nice to know the total scope of that problem and then you could deal with it, but right now investors are somewhat skeptical and somewhat fearful of what could happen to Lehman,” he said.

The S&P/TSX composite index .GSPTSE closed up 156.82 points, or 1.24 percent, at 12,769.58 with half of its 10 main sectors rising. The benchmark ended the week 0.4 percent lower.

The banking group gave up 1.2 percent, with Royal Bank of Canada RY.TO down 1.5 percent at C$49.20, and Toronto-Dominion Bank TD.TO off 0.9 percent to C$62.29.

The materials and energy sectors rose 8.2 percent and 2.1 percent, respectively. In the oil patch, Suncor Energy SU.TO added 4.9 percent to C$50.20, while Barrick Gold ABX.TO was up 9.7 percent at C$31.47.

The TSX has racked up three consecutive days of gains, making for a 5 percent advance on the heels of a rout that began last week on worries of slowing global growth and a slackening demand for resources.

The index had dropped nearly 12 percent over the course of six sessions, putting it within sight of a bear market, which is generally defined as a 20 percent drop from the peak.

Analysts have said a bargain-hunting rally was expected after the steep and abrupt selloff, but that the fundamental pressures may reemerge.

“I would think that we went too far too fast for that period of time and now we’re catching up some (but) I still think the direction is down,” Mastracci said.

Market volume was 405 million shares worth C$7.1 billion. Advancers outpaced decliners 933 to 551. The blue chip S&P/TSX 60 index .TSE60 closed up 9.18 points, or 1.21 percent, at 764.89.

In New York, stocks ended little changed in volatile action as uncertainty over Lehman hung over the market. The Dow Jones industrial average .DJI closed down 11.72 points, or 0.1 percent, at 11,421.99, while the Nasdaq Composite Index .IXIC edged up 3.05 points, or 0.14 percent, to 2,261.27. ($1=$1.06 Canadian) (Editing by Peter Galloway)

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