March 18, 2008 / 2:31 PM / 11 years ago

UPDATE 1-Toronto stocks rise, but off session high

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TORONTO, March 18 (Reuters) - Toronto’s main stock market index jumped more than 1 percent at the open on Tuesday before scaling back, as investors picked up shares offering value after steep losses in the previous session.

Investors were also in a buying mood ahead of the U.S. Federal Reserve’s interest rate announcement later in the day.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 57.90 points, or 0.5 percent, at 13,010.05 in morning trading, after earlier climbing to 13,129.82. This follows a drop of 300 points on Monday.

Seven of the TSX index’s 10 main groups rose, with the influential energy group up 0.9 percent and the heavily weighted financial group gaining 0.6 percent.

Analysts and economists widely expect the Fed to cut U.S. short-term interest rates by one percentage point, 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 the Fed and slash interest rates aggressively amid growing market turmoil.

“We’re following through on the overnight rebound and waiting on the Fed and we’ll see where we go from there,” said Paul Hand, managing director at RBC Capital Markets.

“It looks like the markets held together yesterday and people are optimistic about it today. Some of the credit fears have abated.”

Most of the country’s biggest oil companies rose in tandem with the price for U.S. crude oil on expectations that a cut in interest rates will hit the U.S. dollar and boost oil demand.

EnCana Corp (ECA.TO) added 44 Canadian cents to C$76.70 and Canadian Natural Resources (CNQ.TO) rose C$1.24 to C$70.96.

The country’s big banks rebounded after a drubbing in the previous session triggered by worries over the health of the credit market.

Bank of Montreal (BMO.TO) gained 85 Canadian cents to C$40.00 and Royal Bank of Canada (RY.TO), the country’s biggest bank, climbed 16 Canadian cents to C$44.48.

But a 0.2 percent dip in the materials group and a 0.9 percent fall among utilities shares tempered the gains.

Gold miners pulled the materials index lower despite firm prices for the precious metal. Barrick Gold (ABX.TO) was down 70 Canadian cents at C$51.49 and Agnico-Eagle Mines (AEM.TO) was off C$2.07 at C$77.24.

Sherritt International (S.TO) dropped C$1.20, or 7.3 percent, to C$15.21. The company 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. It also plans to sell about C$400 million of its shares to a syndicate of underwriters.

In the utilities group, index heavyweight TransAlta (TA.TO) was down 61 Canadian cents at C$32.13. ($1=$0.99 Canadian) (Reporting by Scott Anderson; Editing by Bernadette Baum)

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