July 17, 2008 / 1:09 PM / 11 years ago

Toronto stock index set to open higher on banks

*TSX index seen rising at open on U.S. bank results

*U.S. quarterly results, data could boost sentiment

*Softening price of oil remains in focus

TORONTO, July 17 (Reuters) - The Toronto Stock Exchange’s main index is expected to open higher on Thursday as more upbeat quarterly earnings in the U.S. financial sector were seen giving a boost to investor sentiment.

The index’s beaten-down financials group could get a big boost after No. 3 U.S. bank JPMorgan Chase & Co (JPM.N) reported results that topped analysts’ estimates.

Toronto financial shares have shed around 18 percent so far this year on fears related to trouble in the U.S. mortgage market.

But any rally won’t likely last long, said Beste Alpargun, vice president of equity research at Citadel Securities in Halifax, Nova Scotia.

“It’s good that we had breathing space a bit, but in the longer term I don’t see the fundamental problems solved,” Alpargun said.

“For today, it may be positive but we will see this shakiness, this roller-coaster for a while.”

Toronto’s financial stocks spiked 5.9 percent on Wednesday after Wells Fargo & Co (WFC.N) reported upbeat quarterly results. That trumped weakness in oil and gas shares, which fell as the price of oil dropped on worries of slowing demand.

U.S. stock index futures rose on Thursday morning on quarterly results from Coca-Cola (KO.N) and United Technologies (UTX.N), as well as data that showed U.S. housing starts rose in June.

The price of oil slipped to around $134 a barrel, extending this week’s steep losses, after data from the U.S. Energy Information Administration showed oil inventories rose.

The resource-laden materials sector could weigh on the Toronto benchmark as the price of gold dipped below $960 an ounce. Gold hit a record high above $987 an ounce hit earlier this week.

Nexen Inc NXY.TO Canada’s fourth-largest independent oil producer and exploration company, could be in the spotlight after it reported a slightly higher second-quarter profit on Thursday.

The S&P/TSX composite index .GSPTSE begins the day at 13,503.80, after rising 146.24 points, or 1.09 percent, on Wednesday. (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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