October 20, 2008 / 2:14 PM / 9 years ago

Toronto stock index soars on resource strength

TORONTO (Reuters) - The Toronto Stock Exchange’s main index soared more than 7 percent in a broad-based rally on Monday as resource issues climbed on strength in underlying commodity prices.

<p>People attend a market open ceremony for the Toronto Stock Exchange at the TSX Broadcast Centre in Toronto June 20, 2008. REUTERS/Mark Blinch</p>

The rise added to the 3.16 percent gain logged on Friday as the resource-heavy benchmark got a big boost from the oil and gas sector, which soared 14.3 percent. Canadian Natural Resources finished ahead 15.9 percent at C$58.55, and EnCana Corp was up 14.4 percent at C$57.07.

Oil jumped more than 3 percent to close at $74.25 a barrel, lifted by expectations that OPEC ministers will agree to cut production at an emergency meeting set for Friday.

The materials group, which includes metals and fertilizer companies, jumped 10.8 percent as gold prices rose. Agnico Eagle climbed 9.7 percent to C$47.06, while Potash Corp of Saskatchewan rose 9.9 percent to C$97.45.

Concerns over fallout from the credit crisis have eased as banks begin lending to each other again, said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

However, markets are now “moving from financial risk to economic risk,” he said, noting that investors are questioning: “If we are in a recession, how deep is it and what is the impact of it on various sectors?”

The S&P/TSX composite index closed up 688.91 points, or 7.2 percent, at 10,251.40, with all but one of its 10 main groups higher.

The gains build on the strong finish last week when the index snapped a three-week losing streak with a 5.5 percent weekly rise, its biggest such gain since October 2002.

“We’re probably going to see the market recover a bit over the next few days but overall I think they’re going to have to retest that bottom that we had a couple of days ago. That is probably going to come sooner rather than later,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

“You’ll probably see some people selling into strength.”

The lone sector in the red was the information technology, group, which slipped 0.05 percent, pulled lower by Research In Motion.

The BlackBerry maker was off 7.6 percent at C$64.88 after one brokerage warned of disappointing retail sales trends for its smartphones and another brokerage cut its revenue and earnings forecasts.

Elsewhere, the overhaul for Canada’s nonbank asset-backed commercial paper market has been delayed by a month but the restructuring should be complete by the end of November.

Market volume was 474.6 million shares worth C$6.78 billion. Advancers outpaced decliners 1,174 to 374. The blue chip S&P/TSX 60 index closed 43.57 points higher, or 7.56 percent, at 619.77.

The Dow Jones industrial average rose 413.21 points, or 4.67 percent, at 9,265.43, while the Nasdaq composite index ended up 58.74 points, or 3.43 percent, at 1,770.03.

($1=$1.19 Canadian)

Additional report by Ka Yan Ng; editing by Rob Wilson

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