TSX rallies on oil prices, UTS deal

CANADA STOCKS-TSX rallies on oil prices, UTS deal

11:15 EDT Wednesday, July 07, 2010

(Refiles to remove extraneous word in fourth paragraph)

* TSX up 106.26 points, nearly 1 pct, at 11,306.43

* Nine of 10 main sectors higher (Updates with details, comments)

By Claire Sibonney

TORONTO, July 7 (Reuters) - Toronto's main stock index rallied for a second day on Wednesday as a rebound in oil prices and a deal by Total SA to buy UTS Energy Corp boosted prospects for the powerhouse energy sector.

French oil major Total agreed to buy UTS for C$1.5 billion ($1.42 billion) in cash, twice the amount it offered for the Canadian oil sands developer 18 months ago. [ID:nSGE66609U]. The news boosted UTS shares 65 percent to C$3.47.

As well, U.S. crude oil futures bounced higher, sending the energy group up 1.8 percent. Suncor Energy , the country's biggest oil company, rose 2.5 percent to C$32.00 while natural gas major EnCana Corp added 1.8 percent to C$32.93. [O/R]

The base-metal mining subsector shot up 4.3 percent while financials edged 0.7 percent higher.

Teck Resources jumped 4.3 percent to C$33.05 while Bank of Montreal rose 1 percent to C$59.15.

"Just a little bit of a relief rally after we've had such a negative tone for a while," said Paul Taylor, chief investment officer at BMO Harris Investment Management.

"I think a lot of investors are doing some bottom-fishing here with some valuations that have come back significantly."

At 11 a.m. (1500 GMT), the Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> was up 106.26 points, almost 1 percent, at 11,306.43. Nine of the 10 sectors were higher. Healthcare stocks fell 0.2 percent.

Worries about a Europe-wide stress test for banks were also in focus as a European committee of bank supervisors was set to outline a methodology for stress tests of about 100 banks. [ID:nLDE6660SG]

($1=$1.05 Canadian) (Reporting by Claire Sibonney; editing by Rob Wilson)