November 26, 2008 / 10:18 PM / 10 years ago

CANADA STOCKS-TSX jumps 200 points on commodity strength

* TSX rises for fourth straight session

* Energy sector leads way up as oil hits $54

* BCE plunges as leveraged buyout put in doubt (Adds quotes, details)

By Jennifer Kwan

TORONTO, Nov 26 (Reuters) - The Toronto Stock Exchange’s main index rose for the fourth straight session on Wednesday as strength in commodities overpowered a steep decline by BCE Inc (BCE.TO) after the telecom giant said its leveraged buyout deal was in doubt.

The index’s big energy group was up 7.9 percent as oil rose $3.67 to settle at $54.44 a barrel, tracking a rally in U.S. stocks and after China cut interest rates. [ID:nSP373462] In the energy group, Canadian Natural Resources (CNQ.TO) rose 12 percent to C$49.00.

Materials advanced 6.5 percent, helped by a rise in base metal prices as investors bet China’s rate cut would help boost demand. [ID:nLQ87774]

“China cut its interest rates today and that is felt to be good news for demand for commodities from the biggest emerging market,” Gavin Graham, director of investments at BMO Asset Management.

“Looking at it, you would say it is a reflection of the return of the demand story from the emerging markets,” he said.

The S&P/TSX composite index .GSPTSE finished up 200.66 points, or 2.38 percent, at 8,643.52, with nine of its 10 main groups higher. The index fought back from a 2.6 percent drop earlier in the day.

When asked whether the four-day winning streak was a sign the market is ready to keep moving higher, Graham said: “Too early to say that we definitively have seen the bottom.”

Shares of BCE, Canada’s biggest telecom company, sank 34.2 percent to C$25.25 as a plan by Ontario Teachers’ Pension Plan and private equity funds to take the company private in the world’s largest leveraged buyout looked to be in jeopardy.

BCE, the most heavily traded stock on the TSX, said it was unlikely to close the C$34.8 billion deal after its accountants said that the company that would emerge from the buyout would not pass a solvency test because of its big debt load. [ID:nN26331920]

The news dragged down the broader telecoms group by 10.5 percent. Telus Corp (T.TO), a main BCE rival, dropped 2 percent to C$38.09.

Shares of National Bank of Canada (NA.TO) fell 3.5 percent to C$39.04 after it became the latest bank to issue a profit warning ahead of the release of its quarterly results. [ID:nN26340877]. The financial group ended up 1 percent.

The latest gains also saw a more buoyant TSX shrug off U.S. durable goods orders, consumer spending and jobless data that reflected a glum economic picture. [ID:nN26338126]

“A lot of stocks have gotten beaten up pretty hard. I think there’s a bit of an optimism trade here,” said Brian Pow, vice-president, research and equity analyst at Acumen Capital Partners, in Calgary.

However, the main Toronto index is down 43 percent from its June peak.

South of the border markets were buoyed by bargain-hunting among tech stocks and on renewed hopes for a General Motors (GM.N) bailout.

The Dow Jones industrial average .DJI rose 247.14 points, or 2.91 percent, to 8,726.61, while the Nasdaq composite index .IXIC ended up 67.37 points, or 4.6 percent, at 1,532.10. ($1=$1.23 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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