October 17, 2008 / 9:28 PM / 10 years ago

UPDATE 4-Toronto stocks log biggest weekly gain in 6 years

* Battered oil and gas sector gains as oil recovers

* Materials sector rises but price of gold sags

* TSX ends week up 5.5 pct, biggest gain since 2002

(Adds analyst’s comments, details)

By Jennifer Kwan

TORONTO, Oct 17 (Reuters) - The Toronto Stock Exchange’s main index closed sharply higher on Friday as energy stocks rose on a rebound in crude and investors shopped for bargains.

In yet another volatile day with a trading range of nearly 800 points from trough to peak, the S&P/TSX composite index .GSPTSE closed up 292.52 points, or 3.16 percent, at 9,562.49, with all of its 10 main groups higher.

The benchmark index rose 5.5 percent for the week, snapping a three-week losing streak. It was the index’s biggest weekly gain since October 2002. Last week it fell 16 percent.

“We’re starting to see signs of some resumption of confidence,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd, in Calgary, Alberta.

The market sank at the open but climbed steadily as its focus shifted to rising oil prices and bargain-hunting. Some investors were also encouraged by billionaire investor Warren Buffett’s remarks that he is buying U.S. stocks.

But Kerkovius said there will be no sharp recovery.

“It’s not going to go straight down and straight up,” he said. “The market is probably going to have to go back and retest those levels we saw.”

The energy group, which had been under pressure for most of the week, gained 6.9 percent as oil rebounded $2 to $71.85 a barrel, helped by expectations that OPEC would cut output at an emergency meeting next week. [ID:nN17332676]

Oil prices are off about 50 percent from the high above $147 a barrel they hit just three months ago, and the energy group has plummeted alongside them.

EnCana Corp (ECA.TO) rose 7.3 percent at C$49.88, while Canadian Natural Resources (CNQ.TO) climbed 5.5 percent to C$50.50.

The financial services group rose 1.9 percent with most banks higher after the board that sets Canadian accounting rules said it is going along with U.S. and international changes that will allow companies to reclassify some financial instruments to allow them to avoid fair-value accounting treatment. [ID:N17457317]

Canadian Imperial Bank of Commerce (CM.TO) rose 6.6 percent to C$58.00, while Royal Bank of Canada (RY.TO) was 1.3 percent higher at C$46.25.

The materials group struggled 0.33 percent higher, after being in the red for most of the morning, as base metals rose while gold slumped. First Quantum Minerals (FM.TO) soared 18.2 percent to C$26.01, while Barrick Gold (ABX.TO) fell 3.6 percent to C$28.01.

Market volume was 489.3 million shares worth C$6.97 billion. Advancers outpaced decliners 1,056 to 504. The blue chip S&P/TSX 60 index .TSE60 closed 17.08 points higher, or 3.05 percent, at 576.20.

The Dow Jones industrial average .DJI fell 127.04 points, or 1.41 percent, at 8,852.22, while the Nasdaq Composite Index .IXIC ended down 6.42 points, or 0.37 percent, at 1,711.29. ($1=$1.18 Canadian) (Additional reporting by Ka Yan Ng; Editing by Peter Galloway)

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