January 31, 2008 / 4:21 PM / 11 years ago

UPDATE 2-Toronto stocks bounce back on bargain-hunting

(Updates with analyst comments)

By Jonathan Spicer

TORONTO, Jan 31 (Reuters) - The Toronto Stock Exchange’s main index was flat on Thursday morning, having bounced back from a 170-point decline as investors sought out bargains in a wide range of sectors.

The rebound came despite lower commodities, a big jump in U.S. jobless claims and concern over more woes at global financial institutions

Energy firms, which dominated the upside in the previous session, were the biggest weighted losers on Thursday. Petro-Canada PCA.TO was off 1.9 percent after the oil producer and refiner said cash flow dropped sharply in the fourth quarter.

But a grab-bag of stocks — including Gildan Activewear Inc (GIL.TO), which said quarterly profit beat its earlier forecasts — rose in a bargain-hunting rally.

“While the market could go down more, a few individual stocks look like they probably have bottomed over the last two or three weeks,” said Irwin Michael, portfolio manager at ABC Funds.

The S&P/TSX composite index .GSPTSE was down 1.72 points at 12,996.49. It sagged more than 170 points shortly after trading began, then bounced into positive territory by mid-morning.

Half of the index’s 10 main sectors were in the red. The energy sector was down 0.4 percent and materials issues were off 0.2 percent.

Petro-Canada fell 91 Canadian cents to C$46.14, while Barrick Gold (ABX.TO), the world’s biggest gold producer, slipped C$1.15 to C$51.76.

U.S. crude oil slipped more than $2.50 to $89.60 a barrel. Spot gold fell by about $6 to near $921 an ounce.

Financial stocks also took a hit, down 0.4 percent after Standard & Poor’s said credit losses for global financial institutions could grow to more than $265 billion. For details, see: [nL31516052]

Bank of Nova Scotia (BNS.TO) fell 32 Canadian cents to C$47.31.

The TSX, which has tracked near the 13,000-point level the last five days, is also under pressure from fears of a U.S. recession. Those fears were stoked on Thursday after data showed U.S. jobless claims rose more than expected last week.

But there was strong momentum to the upside as well, with fertilizer producer Potash Corp of Saskatchewan POT.TO rising C$1.84 to C$137.28.

The consumer discretionary sector rose 0.7 percent, with Gildan Activewear up C$1.87 at C$37.33.

$1=$1.01 Canadian Reporting by Jonathan Spicer; Editing by Rob Wilson

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