Toronto stocks rally back with Potash, Agrium

Tag : potash

TORONTO (Reuters) - The Toronto Stock Exchange's main index rosesharply on Friday morning after Thursday's near 7-percent drop,with commodity shares rebounding ahead of a vote by the U.S. Houseon the revised $700 billion bailout package for the financialindustry.
The materials group led the way higher, up 8.5 percent, withfertilizer producers Potash Corp of Saskatchewan up 11.3 percent at C$112.45, and Agrium Inc up 6.8 percent to C$48.05.
Both stocks plunged on Thursday after Merrill Lynch downgraded thembecause of uncertainty about earnings in the fertilizer sector.
Investors bought into the market after two "very severe tradingsessions" this week, said Paul Taylor, chief investment officer atBMO Harris Investment Management Inc.
But markets were also digesting signs of weakening economies,including data released Friday that showed the U.S. reported itsbiggest monthly job loss in 5-1/2 years.
"They do indicate we're in for a period of economic slowing, whichis not surprising given where business and consumer sentiment are,"Taylor said.
Shortly after 11 a.m. (1500 GMT), the S&P/TSX composite index<.GSPTSE> was up 431.71 points, or 3.96 percent, at11,332.25, with all but one of its 10 main groups higher. The smallhealth-care group was down 1.2 percent.
The heavyweight energy sector rose 5 percent with EnCana Corp up 5.8 percent at C$62.91, while Canadian Natural Resources rose 7.3 percent to C$69.87.
Financial services rose 2.5 percent, with Canadian Imperial Bank ofCommerce up 3.9 percent at C$60.09 after it said it will limit its U.S.residential exposure through a $1.050 billion agreement with a fundarranged by Cerberus Capital Management.
"Any move to strengthen the balance sheet at CIBC, or any of thebanks, is going to be viewed positively," Taylor said.
"That is the cloud that hangs over the financial services industryand by association, the Canadian financial industry."
Still, the market's focus is trained on the fate of the revisedU.S. financial rescue plan, Taylor said.
The U.S. House of Representatives is expected to vote on the plan,aimed at allowing the U.S. Treasury to mop up bad mortgage-relatedassets from financial institutions, later on Friday.
In earnings, Corel Corp posted a higher quarterly profit as revenue rose in its keysegments but the consumer software maker trimmed its 2008 outlook.
Russian billionaire Oleg Deripaska said the global financial crisisforced him to divest his 20 percent stake in auto parts maker Magna to creditors that helped fund the $1.4 billion deal.
Magna fell 13.3 percent to C$42.67.
($1=$1.08 Canadian)
(Reporting by Jennifer Kwan; Editing by Peter Galloway)
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