By Leah Schnurr
Reuters News Agency
Wednesday, October 4, 2006

Also published in:

TORONTO (Reuters) - Toronto stocks reversed direction to finish sharply higher on Wednesday, as beaten-down energy shares bounced higher on a rebound in crude prices to lead a broad rally.

Adrian Mastracci, portfolio manager at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "Oil is the operative word for that little bounce."

The Toronto Stock Exchange S&P/TSX composite index closed up 91.99 points, or 0.8 percent, at 11,618.12 after being down more than 100 points by late morning, following Tuesday's 261-point plunge.

But by the closing bell the heavily weighted oil and gas sector had moved higher along with the price of crude.

"Oil is the operative word for that little bounce," said Adrian Mastracci, investment counsel and president at KCM Wealth Management Inc. in Vancouver.

"Yesterday we took a bath, today we're draining the tub," he said.

Energy shares were up 1.5 percent, as oil prices rose amid worries over instability in Nigeria. November delivery crude rose 77 cents, or 1.3 percent, to $59.41 a barrel.

Suncor Energy Inc. gained C$2.52, or 3.4 percent, to C$76.41, while EnCana Corp. rose 86 Canadian cents, or 1.8 percent, to C$49.95.

Overall, nine of the TSX index's 10 main groups ended higher, with one flat.

"I think it's just the fact that the investment world doesn't look quite so scary," Mastracci said of the rally.

"Although the U.S. will still have some kind of a slowdown ... you're going to have to have some kind of a parachute with you."

However, Michael Sprung, president of Sprung & Co. Investment Counsel in Toronto, didn't think the fear that has been undermining the market had left.

"Overall, I think the market remains very nervous. The biggest worries are probably stemming in Canada from the energy side at the moment," said Sprung.

He added he expects to see some rotation of investors out of energy issues and into other sectors such as financials.

The main TSX index has lost 3.8 percent since the beginning of September, largely due to weak commodity prices. The composite is still up 3.1 percent on the year.

Also in positive territory on Wednesday were shares in gold miners, despite a drop in the price of bullion, as investors moved away from the commodity. Gold for December delivery fell $14.80 to $566.70 an ounce.

The TSX gold subindex, part of the broader materials group, was up 1.4 percent, which helped lift materials 0.7 percent.

Barrick Gold, the world's biggest producer, rose 64 Canadian cents, or 2 percent, to C$32.60, while Goldcorp was up 44 Canadian cents, or 1.8 percent, at C$24.44.

Market volume was a heavy 385 million shares worth C$7 billion. Decliners outpaced advancers 832 to 732. The blue chip S&P/TSX 60 index closed 7.66 points higher, or 1.2 percent, at 668.62.

South of the border, the Dow Jones industrial average closed at a record high for a second day in a row, supported by optimism over profit expectations and interest rates.

The Dow rose 123.27 points, or 1.05 percent, to end at 11,850.61. The Nasdaq composite index jumped 47.30 points, or 2.11 percent, to close at 2,290.95.

($1=$1.13 Canadian)

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.