*TSX extends gains, follows equity gains in Europe, Asia
*US Fed set to announce interest rate cut decision
*Nexen rallies after quarterly profit beats expectations
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TORONTO, Oct 29 (Reuters) - The Toronto Stock Exchange’s main index rallied on Wednesday morning as commodity stocks got a lift from underlying prices, and as hopes rose that the U.S. Federal Reserve and other central banks would cut interest rates further to try to revive global growth.
Heavily-weighted stocks that helped to push the market higher included EnCana Corp ECA.TO, which rose 4.7 percent to C$58.07, and Manulife Financial MFC.TO, which was up 6.7 percent to C$25.07.
The U.S. Federal Reserve is expected to chop its benchmark interest rate by at least 50 basis points, which would take the fed funds rate down to 1 percent.
“The U.S. Fed is going to announce an interest rate cut this afternoon,” said Douglas Davis, president at Davis-Rea. “This is bad for the U.S. dollar and good for resource stocks.”
At 9:50 a.m., the S&P/TSX composite index .GSPTSE was up 128.14 points, or 1.4 percent, at 9.279.72, with four of its 10 main groups higher.
The heavily-weighted energy sector rose 4.9 percent as the price of crude rose above $66 a barrel, tracking a rise in global equity markets on expectations of more interest rate cuts. [ID:nN28430415]
Nexen Inc NXY.TO rose 17.3 percent to C$19.06 after Canada’s No. 4 independent oil explorer said quarterly profit more than doubled and beat market expectations. [ID:nBNG218049]
Materials climbed 4.1 percent as gold and base metals prices rose. Agnico-Eagle AEM.TO, which is expected to report quarterly results later in the day, was up 4.2 percent to C$31.85.
The financial services sector edged 0.14 percent higher.
After the market close on Tuesday, Canada’s insurance regulator said it will ease guidelines on the capital that insurers need to set aside for guaranteed payments on segregated funds, lifting a concern that weighed on their share prices during the recent equities market plunge.[ID:N28412537] ($1=$1.25 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)