*TSX rallies after near 7 percent drop on Monday
*Energy sector climbs 6.6 percent as oil bounces back
*Hopes for U.S. bailout plan boost financial services
(Adds analysts’ comments, updates figures)
TORONTO, Sept 30 (Reuters) - The Toronto Stock Exchange’s main index was vigorously higher on Tuesday afternoon as market hopes for a deal on the $700-billion Wall Street bailout plan revived and as oil and gas stocks got a boost from crude’s recovery.
The index tumbled nearly 7 percent on Monday, the biggest drop in eight years, largely on the back of energy issues. Oils sank as oil tumbled more than $10 a barrel to below $97 as U.S. lawmakers rejected the rescue plan aimed at mopping up toxic assets at troubled financial institutions.
As hopes for the bailout revived on Tuesday, the energy group rose 6.6 percent as oil bounced back to $100 a barrel. [ID:nSP246010]
“The main thing pushing it ... is there is the belief that they are going to renegotiate and tweak the bailout package over the next one or two days,” said Steve Ibel, institutional equities trader at Beacon Securities in Halifax, Nova Scotia.
Given the previous day’s rout, it’s no surprise to see the market rebound, said Fred Ketchen, director of equity trading at ScotiaMcLeod.
“When you get a swing like a $10.50 in a commodity like oil -- where the demand hasn’t really backed off a whole lot -- it’s a technical market maneuver and you would expect to see a bounce up,” he said.
At 1:45 p.m., the S&P/TSX composite index .GSPTSE was up 519.12 points, or 4.6 percent, at 11,804.19, with all of its 10 main groups higher.
Materials were up 2.9 percent with Potash Corp of Saskatchewan Inc POT.TO rising 5.2 percent at C$142.34, while Teck Cominco Ltd TCKb.TO rose 8.6 percent to C$31.42.
Fording Canadian Coal Trust FDG_u.TO unitholders voted in favor of a $14 billion takeover by Teck Cominco that will make Teck one of the world’s top exporters of coal used in steel-making. Fording units climbed 10 percent to C$87.05.
The financial services sector rose 4.3 percent with Manulife Financial MFC.TO up 1.6 percent at C$36.84, while Royal Bank of Canada RY.TO, Canada’s biggest bank, rose 6.3 percent to C$50.47.
In the oil patch, EnCana Corp ECA.TO jumped 6.6 percent to C$69.27, while Canadian Natural Resources CNQ.TO was up 9 percent at C$71.22.
In economic news, Canadian gross domestic product rose steeply in July, while industrial product prices and raw materials prices fell in August. [ID:N30427649]
Elsewhere, analysts cut the Forzani Group Ltd’s FGL.TO stock price target and lowered its earnings-per-share estimates after disappointing same-store sales from Canada’s biggest sporting goods retailer amid a slowing retail outlook. [ID:N30431694] The stock rose 6.6 percent to C$10.93, however. ($1=$1.06 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)