September 19, 2008 / 2:24 PM / in 9 years

REFILE-UPDATE 1-Toronto stocks surge on financial rescue plans

(Refiles to correct date in first paragraph to Sept 19)

*TSX benchmark index opens more than 5 pct higher

*Financials climb 6 pct after U.S. halts short selling

*Energy stocks spike as oil rises to $102 a barrel

(Adds details)

TORONTO, Sept 19 (Reuters) - The Toronto Stock Exchange’s main index surged as much as 5.5 percent on Friday morning as investors cheered a series of steps by governments around the world to restore confidence in the global financial system.

The rally came after news that U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke plan to work through the weekend with Congress on a plan to deal with toxic assets that have clogged the financial system for a year. [ID:nN13574113]

The markets also welcomed an emergency order by U.S. regulators temporarily halting short sales of hundreds of financial shares. Short selling, the practice of borrowing a stock on a bet its price will fall, has contributed to sharp declines in equity markets since the credit crunch began last year. [ID:nN19484907]

The surge on Friday came after a 1.6 percent rally the previous session after the world’s top central banks injected billions of dollars into the financial system to grease seized-up money markets.

Shortly after the open, the S&P/TSX composite index .GSPTSE was up 532.09 points, or 4.41 percent, at 12,596.66, with all of its 10 main groups higher. Minutes after the open the market had surged more than 5 percent before backing off a bit.

The heavily-weighted financial services sector rose 4 percent with Canadian Imperial Bank of Commerce (CM.TO) up 4 percent to C$62.05.

The heavyweight energy sector spiked 4.3 percent as oil rose above $100 a barrel on expectations a comprehensive U.S. government plan would help shore up confidence in battered financial markets. [ID:nSP62251]

In the oil patch, Canadian Natural Resources (CNQ.TO) soared 6 percent to C$82.70.

The materials group added 5.2 percent. Among the gainers in the sector, First Quantum Mineral (FM.TO) surged 13 percent percent to C$49.50 and Potash Corp of Saskatchewan Inc (POT.TO) (POT.TO) climbed 7 percent to C$178.63. ($1=$1.06 Canadian) (Reporting by Jennifer Kwan; Editing by Frank McGurty)

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