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TORONTO, Jan 31 (Reuters) - Shaking off a weak start, the Toronto Stock Exchange’s main index pushed higher on Thursday, as investors scouted for bargains in shares that had been knocked down by worries over the global economy.
Gains were across the board as the market absorbed Wednesday’s half-point U.S. interest rate cut, which made for 1.25 percentage points in rate cuts in the United States in less than two weeks.
After slumping more than 170 points in the morning, the market rallied as investors bought into the energy, financial and materials sectors.
In individual moves, Potash Corp of Saskatchewan POT.TO added C$6.39, or 4.7 percent, to C$141.83, while Nova Chemicals Corp NCX.TO gained C$1.74, or 6.4 percent, to C$28.74 after the petrochemical maker swung to a fourth-quarter profit.
“A 1.25 percentage cut in interest rates in the U.S. is pretty dramatic, so principally I think that’s what’s doing it,” said Douglas Davis, president at Davis-Rea.
“I think what will happen is this will go on for a while and then the lows will be tested one more time at some point later in the year.”
The S&P/TSX composite index .GSPTSE unofficially closed up 156.87 points, or 1.21 percent, at 13,155.08 with all of its 10 main sectors in positive territory.
The financial sector, the biggest sector on the index, rose 1.4 percent, with Canadian Imperial Bank of Commerce CM.TO up C$4.55, or 6.6 percent, at C$73.25, and Toronto-Dominion Bank gaining 76 Canadian cents, or 1.1 percent, to C$68.01.
The sector followed the direction of the U.S. banking sector, which jumped as executives at bond insurer MBIA Inc MBI.N sought to reassure the market about the company’s outlook.
Financials were also helped by bargain-hunting as investors returned to the sector, which has been hurt by big writedowns, said Joe Ismail, technical analyst at Maison Placements Canada.
“It becomes tempting, even with the massive losses that they have declared, for the smart money that has a longer-term horizon to step up to the plate and position themselves to begin to nibble on these banks,” Ismail said.
The heavyweight energy sector moved up 1 percent, with Canadian Oil Sands Trust COS_u.TO up C$1.98, or 5.5 percent, at C$38.00. The trust reported after market close on Wednesday that it had quadrupled its fourth-quarter profit.
On the downside, Petro-Canada PCA.TO was off C$1.42, or 3 percent, at C$45.63, despite reporting higher fourth-quarter profit amid higher crude production and prices.
$1=$1.00 Canadian Reporting by Leah Schnurr; Editing by Peter Galloway