May 21, 2010 / 4:43 PM / in 9 years

CANADA STOCKS-TSX heads higher after hitting 14-week low

* TSX up 1 percent, at 11,520.20

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

* Nine of 10 sectors higher (Adds details)

By Ka Yan Ng

TORONTO, May 21 (Reuters) - Toronto’s main stock index rebounded strongly by midday Friday, clawing back from a near-2 percent drop, as low prices attracted bargain-hunters after a six-day slide brought on by Europe’s debt woes and fears about the outlook for global growth.

The index fell sharply to a 14-week low shortly after the open, deepest in the resources groups due to weak commodity prices, and in line with sliding global markets. [MKTS/GLOB]

But the TSX climbed out of the hole as both the materials and energy sectors recovered from more than 1 percent losses. Materials were up 1.3 percent, while energy was up 1.8 percent.

Teck Resources TCKb.TO rose 5.8 percent to C$33.78, while Talisman Energy TLM.TO gained 3 percent to C$17.45, and First Quantum Minerals (FM.TO) advanced 5.1 percent to C$63.55. Suncor Energy (SU.TO) climbed 2.1 percent to C$31.09.

Investor confidence got a boost as 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. [ID:nSGE64K06K] [ID:nN20244272]

“The passing of the German rescue package was quite a turning point for the market I think. It’s very difficult to change economies around and the psychology of people,” said Sal Masionis, a stockbroker at Brant Securities.

At 12:17 p.m. (1617 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 114.25 points, or 1 percent, at 11,520.20, though still down more than 4 percent on the week.

All 10 of the index’s main groups advanced, a dramatic turnaround from the start of the session when all sectors had recorded losses greater than 1 percent.

“It’s due for a bounceback,” said Paul Gardner, partner & portfolio manager at Avenue Investment Management.

“When you look at the fundamentals of the equity market, and not taking into consideration the sovereign debt crisis in Europe, it is getting cheap.”

Gardner said that while recent European developments have clouded the mood on the markets, the North American economy has fared relatively well, particularly Canada where “the consumer is alive and well.”

Canadian consumers spent heavily on motor vehicles and parts in March, causing retail sales to jump 2.1 percent, the most in five years, data showed on Friday. [ID:nN21207192]

Inflation came in slightly higher than expected, keeping alive the possibility of a June interest rate hike by the Bank of Canada. [ID:nN21149251] [ID:nTOR007509]

Canadian financial markets will be closed on Monday for Victoria Day. (Reporting by Ka Yan Ng; editing by Rob Wilson)

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