TSX rises as bargain hunters move in

TORONTO • The Toronto stock market snapped a vicious, four-session losing run Thursday with a solid triple-digit advance as bargain hunters moved into depressed stocks, particularly those in the energy sector.

The S & P/TSX composite index jumped 183.09 points to 14,052.97 after losing 800 points, or 5.5%, just since last Wednesday.

The Toronto market’s energy sector was a major target of buyers, rising more than 3% as the November crude oil contract in New York erased early losses to rise US92¢ to US$82.70 a barrel. The energy group had plunged 20% over the past month as crude prices dove 13% and a faltering global economy dampened demand prospects and hurt prices for oil and metals.

“With the level of downside that we saw, there just has to be opportunities in the market and so I think we’re seeing some of that,” said Paul Taylor, chief investment officer of asset allocation at BMO Global Asset Management Canada.

“That’s investors trying to get ahead of things and say, look, this has probably been overdone.”

The Canadian dollar was also off the lows of the day, up US0.07¢ to US88.90¢. The currency had been sharply lower earlier as traders continued to buy into the U.S. dollar. The loonie had also been hurt by data showing that manufacturing sales fell 3.3% in August to $52.1-billion. Economists had expected a drop of 1.6%.

The sharp sell-off seen on U.S. markets this month also largely took a break amid a strong read on U.S. manufacturing output. The Federal Reserve says output at manufacturing plants rose 0.5% in September after declining 0.5% in August. Total industrial production surged 1% last month.

The Dow Jones industrial average fell 24.5 points to 16,117.24, Nasdaq was up 2.07 points to 4,217.39 and the S& P 500 index rose 0.27 of a point to 1,862.76.

Most Toronto sectors supported the market — railway stocks boosted the industrial sector 2.45%. The financials sector also provided lift, up 0.6%.

The base metals sector was the major decliner, down 1% as the December copper contract dipped US3¢ to US$2.98 a pound.

The gold sector was also a drag, down about 0.25% as December bullion took back US$3.60 to US$1,240.50 an ounce.

North American markets have plunged in recent days as a retracement that started last month gained momentum on worries that Germany — Europe’s biggest economy — is heading back into a recession. It’s also been exacerbated by a worsening global outlook from the International Monetary Fund and a disappointing read Wednesday on U.S. retail sales in September.

Toronto has been moving deeper into correction territory and has been in danger of giving up all year-to-date gains. With Thursday’s gain, the index has still lost 10.25% since hitting record highs on Sept. 3 with resource sectors absorbing most of the damage. The base metals components has also fallen about 22% in the past month and the other major TSX pillar, the financials group, has fallen close to 9%.

U.S. markets have so far avoided formally falling into correction, defined as a drop of 10% from recent highs, but that could change soon.