February 28, 2008 / 10:20 PM / 10 years ago

UPDATE 4-Strong commodities propel Toronto stocks higher

(Adds detail, quotes)

By Leah Schnurr

TORONTO, Feb 28 (Reuters) - The Toronto Stock Exchange’s main index ended higher on Thursday, spurred by resource issues as commodity prices surged and oil company Canadian Natural Resources (CNQ.TO) said its profit more than doubled.

Prices for both oil and gold, key underlying commodities for the resource-heavy Toronto market, hit new highs while the U.S. dollar sagged. Oil settled up $2.95 at $102.59 a barrel after earlier racing to $102.97 after a fire at a major European natural gas terminal.

Toronto’s energy sector advanced 2.4 percent, while Canadian Natural was up C$3.38, or 4.7 percent, at C$75.20 after reporting strong fourth-quarter results, helped by soaring oil prices.

Also in the oil patch, Suncor Energy (SU.TO) rose C$3.30, or 3.3 percent, to C$103.95, and Canadian Oil Sands Trust COS_u.TO added C$1.32, or 3.2 percent, to C$43.00.

The gold producers subindex was up 2 percent, boosted by a record high for bullion as spot gold moved as high as $969 an ounce before easing slightly to $968.90. Barrick Gold (ABX.TO) was up C$1.40, or 2.8 percent, at C$52.00.

The larger materials group also pushed up 2 percent, with Potash Corp of Saskatchewan (POT.TO) rising C$2.76, or 1.8 percent, to C$158.78 and Teck Cominco TCKb.TO gaining C$2.06, or 5.3 percent, to C$41.19.

“On commodities, certainly we are getting some traction, (but) it should be a lot more as, interestingly enough, stocks are still not back at levels anywhere near the levels they were at the last time oil was at this level,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd. in Calgary.

“So the market’s enthusiasm for commodities at this time is relatively tempered and it should, in my view, be a lot stronger.”

The S&P/TSX composite index .GSPTSE closed up 95.51 points, or 0.69 percent, at 13,873.89 with six of its 10 main sectors ending higher.

The gain brought the index into the positive for the year for the first time since the opening days of January, up 41 points over December’s close.

On the downside, Bank of Montreal (BMO.TO) and Canadian Imperial Bank of Commerce (CM.TO) weighed on the benchmark amid worries over more writedown because of the credit crunch.

BMO was down C$1.65, or 3.1 percent, at C$52.35 after ratings agency DBRS downgraded the notes of two troubled commercial paper trusts the bank is exposed to.

CIBC shed C$1.05, or 1.5 percent, to C$67.95 after it reported a hefty first-quarter loss om charges due to its exposure to the troubled U.S. mortgage market and as executives acknowledged that more writedowns may be needed. The financial group overall was down 0.8 percent.

Also in the negative, the consumer discretionary group shed 1.4 percent, while media group Quebecor Inc QBRb.TO gave up C$1.15, or 3.7 percent, at C$30.10.

Elsewhere, shares of Biovail Corp BVF.TO shot up late in the day after founder Eugene Melnyk told the company in a letter to the board that he is considering his options, including selling his stake or joining with a partner to buy the company out. Biovail finished up 78 Canadian cents, or 5.7 percent, at C$14.39.

Market volume was 461 million shares worth C$8.5 billion. Advancers outpaced decliners 891 to 722. The blue chip S&P/TSX 60 index .TSE60 closed up 6.26 points, or 0.77 percent, at 814.02.

In New York, shares were sharply lower amid more signs of weakness in the job market and comments from U.S. Federal Reserve Chairman Ben Bernanke that problems in the housing market could lead to failures of small banks.

The Dow Jones industrial average .DJI closed down 112.10 points, or 0.88 percent, at 12,582.18 and the Nasdaq composite index .IXIC fell 22.21 points, or 0.94 percent, to 2,331.57.

$1=$0.98 Canadian Editing by Rob Wilson

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