December 12, 2008 / 9:40 PM / 10 years ago

CANADA STOCKS-TSX closes higher on hope for U.S. auto aid

* Hope for aid to U.S. auto industry helps boost market

* TSX ends 405 points above session low

* Market finishes week with gain of 4.9 percent (Adds details, comments and official numbers)

By Frank Pingue

TORONTO, Dec 12 (Reuters) - Toronto’s key stock index ended higher on Friday as news that the U.S. government might throw a lifeline to troubled automakers helped steer the market clear of what was shaping up to be a big loss.

The index opened with a big fall but it started to recover after the White House said it may be willing to provide emergency funding to the struggling U.S. auto industry. On Thursday night, the U.S. Senate turned down a rescue package for the industry.

“The auto bailout was a failure from last night, and from last night to this morning the markets were down,” said Francis Campeau, broker at MF Global Canada, in Montreal.

“What saved the day was the U.S. statement that basically said they will not let the auto industry down, and that kind of reignited hope of U.S. government intervention towards the car industry.”

Hefty gains in both the heavily weighted financial sector and materials group were the key drivers behind the index’s gain, its third in five sessions this week.

The S&P/TSX composite index .GSPTSE rose 123.55 points, or 1.47 percent, to 8,515.45, with six of its 10 subindexes ending higher. For the week, the key index rose 4.9 percent and reclaimed a piece of the 12.4 percent loss suffered last week.

Lost in the market’s closing numbers on Friday was the scope of the rally it put together after stumbling out of the gate to its lowest level in a week.

Early in the session, the key index tumbled 281.77 points to 8,110.13 as investors responded to the news that the package of measures to provide aid to U.S. automakers had died in the Senate due to opposition from Republicans.

The financial index, which makes up about a third of the index, snapped a three-session losing skid and rallied 3.37 percent to lead the index back into positive territory on hope for the auto industry.

Shares of Manulife Financial (MFC.TO), the main contributor to the market’s rally, closed 11.96 percent higher at C$21.25, while Royal Bank of Canada (RY.TO) shares rose 2.47 percent to C$34.80.

$1=$1.25 Canadian Editing by Peter Galloway

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