August 20, 2008 / 9:25 PM / 10 years ago

UPDATE 3-Toronto stocks rise sharply as resource shares climb

(Updates closing numbers, adds details, quotes)

*TSX index jumps 2 percent in broad rally

*Index logs biggest one-day advance in three weeks

*Energy leads the way up as oil prices firm

By Leah Schnurr

TORONTO, Aug 20 (Reuters) - The Toronto Stock Exchange’s main index surged 2 percent on Wednesday, its biggest advance in three weeks, yanked higher by rallying resource shares as oil prices firmed.

Energy shares led the broad rally as the price of oil rose 45 cents to $114.98 a barrel amid tensions between Russia and the United States over the latter’s missile shield agreement with Poland.

Oil producer Canadian Natural Resources (CNQ.TO) was up 7.5 percent at C$88.40. U.S. business giants Warren Buffett and Bill Gates toured Canadian Natural’s Horizon oil sands project in northern Alberta this week. See [ID:nN20454040]

The materials sector, home to resource shares, also pushed the benchmark up as base-metals miners gained, but gold producers cut earlier advances as gold dipped. Teck Cominco TCKb.TO added 5.8 percent to C$42.65.

“It seems to be more a case of sentiment than actual changes in the underlying commodities,” said Bob Gorman, chief portfolio strategist at TD Waterhouse.

“For the energy stocks, some of the big-cap, higher-quality producers have fallen a lot relative to the price of oil ... and a lot of them look pretty good here,” Gorman added.

The S&P/TSX composite index .GSPTSE closed up 286.29 points, or 2.19 percent, at 13,350.14 with all 10 of its main sectors higher.

The energy and materials sectors climbed 4.6 percent and 1.8 percent, respectively.

In the oil patch, Suncor Energy (SU.TO) climbed 6.4 percent to C$59.89. In the materials group, fertilizer producer Agrium AGU.TO added 4 percent to C$89.80.

Also on the energy front, Chevron Corp (CVX.N) and its partners agreed to formal terms with Newfoundland over the Hebron oil field, the Canadian province’s fourth offshore project. Hebron will start producing in the next eight to 10 years. See: [ID:nN20452501].

The large financial-services sector also supported the index, ending a three-day slump and rising 1.2 percent. Bay Street’s banks have been bruised this week by resurgent worries over more impact from the credit crunch spilling over from the United States.

Bank of Nova Scotia (BNS.TO) gained 1.5 percent to C$47.80, and Canadian Imperial Bank of Commerce (CM.TO) was up 1.5 percent at C$59.33. The major Canadian banks are set to report quarterly results next week.

Shares of Corel CRE.TO spiked 15 percent to C$11.50 in light volume after sources said the consumer software developer has received multiple preliminary offers from private equity firms and strategic buyers. See: [ID:nN20409404].

Market volume was 339 million shares worth C$6.6 billion. Advancers outpaced decliners 868 to 671. The blue chip S&P/TSX 60 index .TSE60 closed up 18.98 points, or 2.43 percent, at 798.81.

In New York, stocks rose after reassuring results from Hewlett-Packard (HPQ.N), while bank shares bounced higher. The Dow Jones industrial average .DJI closed up 68.88 points, or 0.61 percent, at 11,417.43, and the Nasdaq Composite Index .IXIC edged up 4.72 points, or 0.2 percent, to 2,389.08.

$1=$1.06 Canadian Editing by Peter Galloway

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