March 18, 2008 / 1:10 PM / 11 years ago

Toronto stocks poised for turnaround

TORONTO, March 18 (Reuters) - Toronto stocks were poised for a higher opening on Tuesday as the market recovers from the previous session’s steep losses which saw the key index notch its biggest decline in more than a month.

Investors will also keep a watchful eye on the U.S. Federal Reserve which is set to make another interest rate announcement later in the day.

Most pundits expect the Fed to implement a one percentage-point cut in U.S. short-term rates, taking the benchmark fed funds target rate down to 2 percent.

Over the weekend, the Fed made an emergency quarter-point cut to its discount rate to 3.25 percent and expanded lending to a wider range of big financial firms.

Meanwhile, Canada’s annual inflation rate eased in February, leaving the Bank of Canada in a comfortable spot if it wants to follow its U.S. counterpart and slash interest rates aggressively amid growing market turmoil.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE begins the day at 12,952 after dropping 300.69 points, or 2.3 percent, on Monday amid more worries over the global credit situation and weak resources.

“We are going to see a rebound. Yesterday was a very drastic correction,” said Luc Girard, director of the portfolio advisory group at Desjardins Securities in Montreal. “We had so much downside Yesterday.”

Firmer resources are expected to lead the rise on Tuesday with most of the key commodities rebounding.

U.S. crude oil was up 2.4 percent at $108.21 a barrel on expectations that a cut in interest rates will hit the U.S. dollar and spur investor demand for oil.

Canadian Oil Sands Trust COS_u.TO, which owns the biggest share of the Syncrude Canada oil sands venture, could see activity after it said it has cut its first-quarter output forecast by 17 percent to account for production problems in January and February.

Metal firms were also expected to rise with gold steady around $1,009.60 an ounce, while copper rose 1.5 percent to $8,170 a tonne.

HudBay Minerals Inc (HBM.TO) could be in the spotlight after it said late on Monday its fourth-quarter profit dropped 83 percent due to lower zinc prices and a strong Canadian dollar.

Sherritt International (S.TO) said on Tuesday it plans to buy all the outstanding units of Royal Utilities Income Fund RU_u.TO that it does not already own for C$12.25 per unit.

The company also said it will sell about C$400 million of its shares to a syndicate of underwriters.

Among other companies, BCE Inc (BCE.TO) could see activity after bondholders said they are appealing a Quebec court decision that dismissed complaints that the telecom company’s pending C$34.8 billion ($34.8 billion) buyout is unfair. ($1=$0.99 Canadian) (Reporting by Scott Anderson; editing by Renato Andrade)

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