Roger Biduk - Bay Street Fights Back

Roger Biduk writes:

The Toronto stock market rose nearly 500 points Tuesday, offsetting a good chunk of the record-setting loss that followed the failure of a US$700-billion bailout for the U.S. financial industry.

Higher oil prices contributed to Tuesday's gains, as well as cautious optimism over the possibility that a compromise financial-sector bailout can be reached in the United States.

But the Canadian dollar took a beating, falling 1.82 cents to 93.97 cents US amid concerns about economic fallout from the political and financial upheaval in the United States.

The S&P/TSX composite index added 467.83 points to close at 11,752.9, after plunging close to 850 points Monday. The TSX Venture Exchange gained 32.97 points to 1,415.

Oil gained $4.27 to US$100.64 following Monday's plunge of US$10.52 amid worries that the U.S. financial crisis will ravage the global economy and cut energy consumption.

The TSX had its steepest-ever point drop Monday, losing 840.93 points, totaling 7.5 per cent or approximately $100 billion of its market value. The previous record one-day drop on Canada's largest stock market was 840.26 points on Oct. 25, 2000.

The Bank of Canada said Tuesday it will auction $4 billion worth of 28-day purchase and resale agreements on Wednesday and is selling $4 billion of its holdings of treasury bills as it works to lubricate seized-up credit markets.

In Canada, government data showed the national economy grew 0.7 per cent in July - well ahead of the 0.2 per cent increase projected by private-sector economists.

The Toronto financial sector was up 5.4 per cent in Tuesday trading. Royal Bank (TSX: RY.TO), TD Bank (TSX: TD.TO) and Bank of Montreal (TSX: BMO.TO) have been cited as possible shoppers for assets amidst the turmoil that has engulfed U.S. banks. Royal shares were up $3 to $50.50, while BMO gained $3.95 to $45.95, a jump of more than nine per cent.

The TSX energy sector rose 5.8 per cent. Sector heavyweight EnCana (TSX: ECA.TO) was up $2.96 to $67.96 while Canadian Natural Resources (TSX: CNQ.TO) gained $7.73, or 11.5 per cent, to $73.
The metals sector jumped 7.6 per cent after declining 12.8 per cent Monday. Teck Cominco (TSX: TCK-B.TO) added $1.30 to $30.22 after losing close to 14 per cent of its value Monday.

The gold sector lost 0.8 per cent as the December bullion contract on the New York Mercantile Exchange fell $13.60 to US$880.80 per ounce. Goldcorp (TSX: G.TO) lost 93 cents to $33.47 while Barrick Gold (TSX: ABX.TO) fell $1.47 to $38.97.

In other corporate news, Fording Canadian Coal Trust (TSX: FDG-UN.TO) was up $8.15, or more than 10 per cent, to $87.27 as Teck Cominco Ltd. (TSX: TCK-B.TO) received the final stamp of approval on $10 billion in financing needed for its takeover of Fording.

Canadian Pacific Railway (TSX: CP.TO) shares were up $1 to $57.07 after it received U.S. regulatory approval for its US$1.48-billion acquisition of Dakota, Minnesota & Eastern Railroad.

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