June 25, 2008 / 7:41 PM / 11 years ago

UPDATE 2-Toronto stock index bounces as financials gain

(Updates to midafternoon)

* TSX gains in choppy session

* Energy shares continue to weigh

TORONTO, June 25 (Reuters) - The Toronto Stock Exchange’s main index teetered around the break-even mark on Wednesday afternoon, as weak energy shares were offset by an upbeat reaction to the Federal Reserve’s decision to hold U.S. interest rates steady, as expected.

After see-sawing to both the positive and negative in choppy trade, the benchmark pushed slightly higher, recovering from earlier losses as investors took heart from comments from the U.S. central bank.

On the downside, resource shares continued to weigh while commodity prices fell. Canadian Natural Resources (CNQ.TO) was down C$2.02, or 2 percent, at C$98.08, while Potash Corp of Saskatchewan POT.TO fell C$1.56, or 0.7 percent, to C$228.43.

The S&P/TSX composite index .GSPTSE was up 6.47 points, or 0.04 percent, at 14,416.07 with six of its 10 main sectors steady. In a volatile session, the index came back from its earlier low of 14,259.88.

In its keenly awaited statement, the Fed voiced greater concern about inflation, while it said the downside risks to growth look to have diminished somewhat.

“I think what (Fed Chairman Ben) Bernanke said was they were having hard time getting a handle on (inflation) and the other thing was that they did expect that it might moderate by the end of this year,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

“It’s probable now that we won’t see any more rate changes, certainly for the summer, and we’ll see what the fall brings.”

On the upside, the financial sector gained 1.6 percent, with Canadian Imperial Bank of Commerce (CM.TO) up C$2.05, or 3.5 percent, at C$61.27, and Bank of Montreal (BMO.TO) ahead C$1.73, or 4.1 percent, at C$44.04.

The consumer discretionary and staples sectors gained 1.6 percent and 1 percent respectively, rallying back from a steep drop in the previous session.

Shares of Research In Motion RIM.TO gained C$1.05, or 0.7 percent, to C$142.83 ahead of quarterly results expected after the market close.

The energy and materials sectors gave up 1.1 percent and 1 percent respectively, while gold and oil prices weakened.

Kinsey also noted that some end of quarter portfolio adjustments could be causing investors to take some profits on stocks that have run up recently, putting pressure on some high-flying resource shares. ($1=$1.01 Canadian) (Reporting by Leah Schnurr; editing by Rob Wilson)

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