June 13, 2008 / 8:56 PM / in 9 years

UPDATE 3-Inflation data lifts Toronto stocks in broad rally

(Adds details, quotes)

* TSX snaps five-session losing streak

* Bargain-hunting sets in after tame U.S. inflation data

* Index down 1.3 percent on the week

By Leah Schnurr

TORONTO, June 13 (Reuters) - The Toronto Stock Exchange’s main index shot higher on Friday, rallying back from a losing streak as optimism over the latest U.S. inflation data prompted bargain-hunting.

The broad-based jump was led by the energy and materials sectors, even though prices for the underlying commodities were soft. Banks gained as inflation woes eased after data showed a tame increase in U.S. core prices.

Big gainers included Potash Corp of Saskatchewan (POT.TO), which rose C$3.97, or 1.7 percent, to C$232.12, and BlackBerry maker Research In Motion RIM.TO, which added C$4.05, or 3.1 percent, to C$136.79.

“The market has been down significantly in the last five trading sessions, and we’re oversold, so everybody is just grasping after some bit of positive news to push the market up today,” said Joe Ismail, technical analyst at Maison Placements Canada.

“(Investors) have been sitting on the sidelines and the cash is burning holes in their pockets, so they decided to plow some money in.”

The S&P/TSX composite index .GSPTSE closed up 175.87 points, or 1.2 percent, at 14,778.46 with all 10 of its main sectors higher.

Despite soft commodity prices, the energy and materials sectors remained a source of strength, gaining 0.9 percent and 1.4 percent respectively.

Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri, said the gains in resources seemed to be a belated reaction to Thursday afternoon’s recovery in commodity prices, which Toronto stocks failed to follow.

“Today’s bounce back is almost a delayed response to yesterday’s gains (in commodities),” she said.

In the oil patch, Canadian Oil Sands Trust COS_u.TO rose C$1.39, or 2.7 percent, to C$52.74. Among miners, Inmet Mining IMN.TO was up C$1.14, or 1.7 percent, at C$69.55.

The financial sector rose 1.6 percent. National Bank of Canada (NA.TO) gained C$1.47, or 2.9 percent, to C$52.78, and Toronto-Dominion Bank (TD.TO) was up 86 Canadian cents, or 1.3 percent, at C$67.85.

On the downside, First Quantum Minerals (FM.TO) fell C$2.06, or 2.8 percent, to C$72.54 after shareholders of Scandinavian Minerals SGL.TO approved First Quantum’s takeover bid.

Worries of inflation and the possibility of tighter interest rates around the world plagued the TSX throughout the week, after the Bank of Canada unexpectedly held rates steady and cited the threat of rising inflation.

The index was down 1.3 percent on the week, which included a drop of more than 200 points on Tuesday, the day of the central bank’s surprise rate decision. Market-watchers had largely expected a quarter-point cut.

Friday’s market volume was 304 million shares worth C$6 billion. Advancers outpaced decliners 917 to 638. The blue chip S&P/TSX 60 index .TSE60 closed up 10.94 points, or 1.26 percent, at 881.72.

On Wall Street, stocks were also buoyed by the inflation data that calmed worries over a near-term rise in interest rates.

The Dow Jones industrial average .DJI closed up 165.77 points, or 1.37 percent, at 12,307.35, and the Nasdaq composite index .IXIC climbed 50.15 points, or 2.09 percent, to 2,454.50. ($1=$1.03 Canadian) (Editing by Rob Wilson)

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