October 20, 2008 / 3:59 PM / 10 years ago

UPDATE 2-Toronto stocks up sharply as oils climb, RIM drops

* Energy group up 5.65 percent, leads index higher

* Nine of 10 groups rise, building on last’s week’s gains

* RIM off nearly 10 percent (Adds details)

TORONTO, Oct 20 (Reuters) - The Toronto Stock Exchange’s main index rose 2.6 percent in a broad rally on Monday morning as higher commodity prices pulled up the energy and materials sectors.

Oil was up at around $72 a barrel, but off session highs, supported by expectations that OPEC may cut output this week to boost prices, [ID:nSYD4652]. Toronto’s oil and gas sector was up 5.65 percent.

Information technology was the only sector that was down, pulled lower by Research In Motion RIM.TO. The BlackBerry maker was off 9.6 percent at C$63.53, mirroring a similar decline in its U.S.-listed stock RIMM.O on fears that economic and competition pressures may cut into the company’s sales estimates.

Pacific Crest said it RIM’s November sales for handsets were at risk of being revised.

In the oil and gas group, Canadian Natural Resources (CNQ.TO) gained 5.5 percent to C$53.27, while Imperial Oil (IMO.TO) rose 8.9 percent to C$39.86.

Energy shares rose as signs emerged that Canada’s energy companies may be hunkering down in the midst of the credit crunch. The Globe and Mail newspaper reported on Monday that Nexen NXY.TO and Opti OPC.TO plan to delay expansion of their Long Lake oil sands project. [ID:nN20507269]

Most Canadian oil companies will detail their 2009 spending plans later this year, and their third-quarter results are expected over the next several weeks.

The materials sector, which includes miners, pushed higher as prices for gold and other metals rose.

Shortly after 11:10 a.m. (1510 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 245.99 points, or 2.57 percent, at 9,808.48. Nine of the index’s 10 main groups were in positive territory.

The gains, though off the session high near 400 points, build on a strong finish last week when the index snapped a three-week losing streak with a 5.5 percent weekly rise, its biggest such gain since October 2002.

“We’re probably going to see the market recover a bit over the next few days but overall I think they’re going to have to retest that bottom that we had a couple of days ago. That is probably going to come sooner rather than later,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

“You’ll probably see some people selling into strength.”

A further boost to the index and its U.S. counterparts came as U.S. Federal Reserve Chairman Ben Bernanke told Congress that another wave of government spending may be needed as the economy limps through what could be an extended period of subpar growth. [ID:nN20254868]

Investor sentiment was already showing signs of improvement as frozen credit markets seem to be thawing. Global stock markets were higher as efforts to shore up the banking system were cheered as the cost for banks to borrow from each other fell. [ID:nLK288525]

“We’re seeing money market rates drop globally on bank bailouts and that’s starting to ease the credit crunch so to speak,” Ibel said.

“Even with that said, there’s still a foregone conclusion that, both in the Canada, the U.S. and globally, there’s going to be a recession coming.”

Market players may get a better sense of the economic view from the Bank of Canada when it sets interest rates on Tuesday, followed by its semi-annual Monetary Policy Report on Thursday. Most analysts expect the central bank to cut its overnight rate but are divided on whether the cut will be 25 basis points or 50.

$1=$1.19 Canadian Reporting by Ka Yan Ng; Editing by Peter Galloway

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