October 30, 2008 / 3:44 PM / 10 years ago

CANADA STOCKS-Toronto up despite sliding resource prices

* Energy issues up but off highs as crude falls

* Relief as U.S. contraction milder than expected

* Barrick posts 26 pct drop in profit

TORONTO, Oct 30 (Reuters) - The Toronto Stock Exchange’s main index rose more than 1 percent on Thursday morning, supported by relief that the U.S. economy did not contract as much as expected in the third quarter, and even as commodity prices turned lower.

Preliminary data showed U.S. third-quarter gross domestic product shrank 0.3 percent, les than the 0.5 percent drop forecast by economists [ID:nN29534671], adding to the positive sentiment seen in Asian and European stock markets.

Shortly after 11:05 a.m., the S&P/TSX composite index .GSPTSE was up 110.00 points, or 1.16 percent, at 9,611.56. Nine of the index’s 10 main groups were advancing.

The rise builds on two straight days of gains as investors have started to buy resource-related issues once more after tracking the decline of commodity prices since September and a period of extreme volatility on the overall index.

The TSX is down 18 percent so far this month.

“The appetite for risk is slowly coming back onto the market. It shows that the measures, or the panic, is fading a bit,” said Francis Campeau, broker at MF Global Canada, in Montreal. He characterized the U.S. data as “a breather.”

There may be additional gains to be made before month’s end as market players rebalance their portfolios, Campeau said.

Demand fears pushed gold and oil down from early gains, [ID:nLU333150] sending Toronto’s energy and materials sectors off their highs.

The materials sector was up 2.3 percent. The gold subindex was ahead 0.93 percent as bullion eased from a one-week high.

Barrick Gold (ABX.TO) was up 1.7 percent at C$28.38 on gold prices. Earlier Barrick, the world’s top gold miner, reported a 26 percent drop in third-quarter profit. [ID:nN30530785]

Meanwhile, Sherritt (S.TO), which said this week it would suspend expansion work at two projects and was reviewing another, fell 2.8 percent to C$4.47 as Paradigm, UBS and RBC cut their price targets on the miner and energy producer.

The oil and gas sector climbed 0.94 percent as the oil price came off early highs and eased below $67 a barrel.

Canadian Oil Sands Trust COS_u.TO fell 1.1 percent to C$11.51 after it announced late on Wednesday it will cut its quarterly distribution by 40 percent to 75 Canadian cents, citing the decline in crude prices and heightened risk in credit markets.

But Talisman Energy TLM.TO was up 3.6 percent at C$11.39 and Husky Energy (HSE.TO) was ahead 3.6 percent at C$33.94.

$1=$1.22 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson

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