May 21, 2010 / 8:39 PM / in 8 years

CANADA STOCKS-TSX gains 1 pct on strength in resources, banks

* TSX up 115.40 points, or 1.01 pct, at 11,521.35

* Recovers from early near 2 pct drop, lowest since Feb.9

* Nine of 10 sectors higher

* Index down 4 percent for the week (Updates to close, adds details)

By Jennifer Kwan

TORONTO, May 21 (Reuters) - Toronto’s main stock index ended a six-session losing streak on Friday, led by resources and bank shares, as some positive developments in Europe and recent price declines helped spur investor buying.

The resource-heavy index fought back from a 14-week low touched earlier on Friday, led higher by a 1.7 percent rise in the hefty energy sector, while materials moved up by 0.7 percent. Financials climbed 0.9 percent.

“We were due for a short-term trading bounce,” said John Johnston, chief strategist for Harbour Group at RBC Dominion Securities.

“The selloff was getting extended, which means in the short term maybe the bad news was getting a little over-discounted,” he said.

Key stocks on the upside included Teck Resources TCKb.TO, which rose 5.6 percent to C$33.75, while Suncor Energy SU.TO rose 2.4 percent to C$31.19.

Talisman Energy TLM.TO was up 2.7 percent at C$17.40, and First Quantum Minerals FM.TO advanced 3.9 percent to C$62.79. Banks Toronto-Dominion Bank TD.TO gained 1.7 percent to C$71.50 and Bank of Nova Scotia BNS.TO rose 1 percent to C$49.50.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 115.40 points, or 1.01 percent, at 11,521.35, with the majority of its 10 main sectors lower. Earlier, the index sank to 11,179.97, its lowest level since Feb. 9.

Despite Friday’s rally, the TSX was down 4 percent for the week as investor sentiment was beaten down by concern austerity measures in some euro zone countries would hurt European and global growth.

But confidence in the market edged higher on Friday after the head of the European Central Bank said the euro was not in danger, while German lawmakers backed a $1 trillion rescue plan for the euro zone, alleviating some of the concerns over sovereign debt levels and prospects for economic recovery. [MKTS/GLOB]

Market strategists also pointed to relatively strong Canadian fundamentals.

Paul Gardner, partner & portfolio manager at Avenue Investment Management, said while recent European developments have clouded the mood on the markets, the North American economy has fared better, particularly Canada where “the consumer is alive and well.”

The rally was supported by data that showed Canadian inflation was higher than expected in April, while retail sales in March soared from February. [ID:nN21216246]

Canadian financial markets will be closed on Monday for Victoria Day.

$1=$1.06 Canadian Additional reporting by Ka Yan Ng; Editing by Jeffrey Hodgson

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