May 28, 2009 / 8:38 PM / 10 years ago

CANADA STOCKS-TSX rallies on oil, bank results

* TSX finishes up 2.47 percent at 10,392.37

* Energy shares up 3.56 pct, oil settles above $65/barrel

* Financial shares rise 2.74 percent on bank results (Updates closing figures, adds details, quote)

By Jennifer Kwan

TORONTO, May 28 (Reuters) - Toronto’s main stock market index rallied on Thursday as energy shares climbed in tandem with oil prices and financial shares gained as results from some of Canada’s big banks topped market expectations.

Four banks reported results on Thursday that were stronger than expected, even as they set aside more money to cover bad loans. [ID:nN28311974]

Shares of Toronto-Dominion Bank (TD.TO) climbed 6.8 percent to C$53.69, while Bank of Nova Scotia (BNS.TO) rose 0.4 percent to C$37.90. National Bank of Canada (NA.TO) was up 3.6 percent at C$51.30.

The bank earnings helped to fuel optimism about an economic recovery, said Paul Harris, portfolio manager at Avenue Investment Management.

“People are feeling that the worst may be over or things are getting better, and at least there’s a stabilization in the financial system,” he said.

However, Canadian Imperial Bank of Commerce (CM.TO) was a top net loser, falling 4.5 percent to C$54.47, as its results were hurt by a raft of writedowns and investors were disappointed by the performance of its key retail operations.

The S&P/TSX composite index .GSPTSE closed 250.21 points, or 2.47 percent, higher at 10,392.37, with seven of its 10 main groups rising.

The price of oil CLc1 rallied to a six-month high after OPEC decided to keep output unchanged and government data showed a steep drop in U.S. crude inventories. Oil settled above $65 a barrel. [ID:nSYD113600]

Oil company Canadian Natural Resources (CNQ.TO) rose 4.5 percent to C$64.52, while Petro-Canada PCA.TO climbed 4.8 percent to C$48.49.

The index’s materials group rose 2.8 percent on firmer metals prices, with Barrick Gold (ABX.TO) up 3.2 percent at C$41.47.

$1=$1.11 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway

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