August 21, 2008 / 8:42 PM / 10 years ago

UPDATE 4-Commodity prices boost Toronto stocks

* Main Toronto stock index rallies 1.4 percent

* Higher commodity prices boost energy, resource shares

* Financials, flat on the day, continue to struggle (Adds comments, details, official data)

By Wojtek Dabrowski

TORONTO, Aug 21 (Reuters) - The main index of the Toronto Stock Exchange finished about 1.4 percent higher on Thursday, as energy and materials producers rallied on the back of stronger commodities.

The price of U.S. crude hit $121.18 a barrel, up $5.62, driven by rising tensions between the United States and energy-rich Russia. Petro-Canada PCA.TO climbed more than 3 percent.

Gold rose above $830 an ounce as the U.S. dollar weakened. Agnico-Eagle Mines (AEM.TO) was up more than 5 percent

“(There was) a huge rebound today in commodity prices, so no surprise, the TSX is doing great,” said Kate Warne, Canadian market strategist at Edward Jones.

Investors have flocked to energy and resource investments as a shelter from weak financial stocks, which have continued to sputter in the face of tough credit markets and a slowdown in the global economy.

Sal Masionis, a stockbroker at Brant Securities, said it will be “quite a few quarters” before financials stabilize, recover and start to lure investors anew.

“There might be some trades in there, but I think that very few people know how much trouble they’re in and what kind of assets they’re holding,” he said of the sector.

The S&P/TSX composite index .GSPTSE rose 189.08 points, or 1.42 percent, to close at 13,539.22.

Overall, six of the 10 main subgroups of the index gained ground, including the heavily weighted energy and materials sectors, which rose 2.33 percent and 3.85 percent, respectively.

Financials edged 0.34 percent lower.

In the oil and gas sector, Petro-Canada climbed 3.2 percent to C$47.93, while Imperial Oil (IMO.TO) rose 3.7 percent to C$54.67.

Among the day’s biggest gainers, Inmet Mining IMN.TO rose 4.8 percent to close at C$65.66. Agnico-Eagle jumped 5.2 percent to end at C$60.75.

Big losers included sportswear retailer Lululemon Athletica LLL.TO, which fell 6 percent to finish at C$20.38.

$1=1.04 Canadian Reporting by Wojtek Dabrowski; editing by Rob Wilson

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