May 20, 2008 / 9:41 PM / 11 years ago

UPDATE 4-Toronto stock index rides oil surge above 15,000

(Adds details, quotes)

*Index closes above 15,000 for first time

*Supported by shares in energy and gold producers

*Shares of BCE Inc fall amid concerns over its buyout

By Leah Schnurr

TORONTO, May 20 (Reuters) - The Toronto Stock Exchange’s main index finished above 15,000 for the first time on Tuesday, propelled by a surge in energy and gold producers amid a continuing run-up in oil prices.

Oil and gas companies were among the biggest advancers by weight with Suncor Energy (SU.TO) up C$4.84, or 7.2 percent, at C$72.37, and Imperial Oil (IMO.TO) climbing C$4.27, or 7.5 percent, to C$60.95.

The sector overall bounded up 3.1 percent, while oil, a key underlying commodity for the resource-heavy TSX, extended its red-hot advance, coming close to $130 a barrel. Crude was lifted by bullish price forecasts and growing worries over tight global stockpiles.

“I think there’s a real rethinking among investors - all of a sudden they’re thinking maybe the $125 oil price is floor rather than ceiling” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“If one believes that, you’ve changed your portfolio in the sense that obviously you add more oil and gas companies because I don’t believe most of the oil and gas companies are trading at anywhere close to $125 oil.”

The S&P/TSX composite index .GSPTSE closed up 63.14 points, or 0.42 percent, at 15,047.34. The energy and materials sectors were the sole groups to end positive.

Since the beginning of May, the index has spiked more than 1,000 points, setting record highs after surpassing the previous record that was hit last July.

Also in the oil patch on Tuesday, Petrobank Energy and Resources PBG.TO jumped C$3.54, or 6.4 percent, to C$59.00 after a report that India’s Oil and Natural Gas Corp (ONGC.BO) was readying a bid for a Canadian oil producer. A Petrobank executive dispelled speculation that the firm was the target.

The gold producers’ subindex lent support to the benchmark as bullion prices also strengthened. Barrick Gold (ABX.TO) rose C$1.70, or 4.2 percent, to C$41.88, and Goldcorp (G.TO) gained C$1.34, or 3.2 percent, to C$42.65. The group overall was up 2.7 percent.

Shares of BCE Inc (BCE.TO) lost C$1.42, or 3.7 percent, to C$37.40 in the wake of reports that the banks behind its C$34.8 billion buyout had submitted new financing terms to the buyout group. The deal has been dogged by concerns that it will not be successful.

Also on the downside, the financial sector gave up 1.2 percent, with Canadian Imperial Bank of Commerce (CM.TO) down C$1.71, or 2.3 percent, at C$73.41, and Bank of Montreal (BMO.TO) off C$1.00, or 2 percent, to C$48.97.

The surge on the benchmark has been largely the result of high-flying commodity prices, particularly oil, and has been helped by returning confidence that the worst of the fallout from the credit crunch has been seen.

Nakamoto noted, however, that he felt some of the rally was part of a delay left over from 2007.

“With the credit crunch hitting us, it just took some of the returns we normally would have got in ‘07 and pushed it to part of ‘08, and it’s just been a compressed movement up,” he said.

Market volume was 468 million shares worth C$9.2 billion. Decliners outpaced advancers 831 to 823. The blue chip S&P/TSX 60 index .TSE60 closed up 4.72 points, or 0.53 percent, at 900.14.

In New York, oil prices had the opposite effect on stocks as worries over the impact prices will have on the consumer deepened, while a key inflation indicator rose more than expected.

The Dow Jones industrial average .DJI closed down 199.48 points, or 1.53 percent, at 12,828.68, and the Nasdaq Composite Index .IXIC fell 23.83 points, or 0.95 percent, to 2,492.26. ($1=$0.99 Canadian) (Editing by Peter Galloway)

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