October 29, 2008 / 8:53 PM / 10 years ago

CANADA STOCKS-Commodities, Fed rate cut spur big gain

*TSX rises 3.8 percent, extends Tuesday’s 7 percent gain

*US Fed announces half point rate cut to 1 percent

*Nexen climbs after quarterly profit beats expectations

(Adds official closing numbers, quote, details)

TORONTO, Oct 29 (Reuters) - The Toronto Stock Exchange’s main index closed 3.8 percent higher on Wednesday as energy and materials issues rose on higher commodity prices, with the gain supported by the U.S. Federal Reserve’s half-point interest rate cut.

Leading the way up was oil company EnCana Corp (ECA.TO), which rose 6.7 percent to C$59.20, and insurer Manulife Financial (MFC.TO), which was up 7.7 percent at C$25.30.

The market was encouraged by the Fed’s half percentage point cut, which took its key fed funds rate down to 1 percent, in an attempt to stimulate the economy.

“The real big story has been the rate decrease in the States,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

“With the rate decrease it affects the (U.S.) dollar. If the dollar goes down, oil goes up — they are inversely related — so that has been helping to push the market up in Toronto.”

The S&P/TSX composite index .GSPTSE was up 349.93 points, or 3.82 percent, at 9,501.56, extending the 7.2 percent gain it logged on Tuesday. Eight of its 10 main groups were higher.

The heavily-weighted energy sector rose 8.6 percent as the price of crude rose above $67 a barrel [ID:nN28430415].

Nexen Inc NXY.TO climbed 14.5 percent to C$18.60 after Canada’s No. 4 independent oil explorer said quarterly profit more than doubled, beating market expectations. [ID:nBNG218049]

Materials climbed 10.9 percent as gold and base metals prices rose. Agnico-Eagle (AEM.TO) rose 8.9 percent to C$33.31, while Barrick Gold (ABX.TO) soared 10.2 percent to C$27.90.

The financial services sector climbed 1.2 percent, helped by Manulife after Canada’s insurance regulator eased guidelines on capital requirements related to segregated funds. [ID:N28412537] ($1=$1.23 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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