Manic-depressive stock market looks for another cheerful day

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(The Canadian Press)

By The Canadian Press

TORONTO - The Toronto stock market looked poised for a major post-Thanksgiving surge as Wall Street geared up for another gain following Monday's record 936-point rise in the Dow Jones industrial average.

Canadian traders returning from the three-day weekend were assessing worldwide optimism prompted by the American government's plan to spend US$250 billion on equity stakes in major banks.

The Canadian dollar was sharply higher, rising 2.90 cents from Friday at 87.59 cents US, after steep declines last week.

President George W. Bush announced the plan to use $250 billion of the $700 billion bailout approved by Congress to recapitalize major American banks and encourage lending.

Bush, in the latest of a series of statements on the troubled economy, said this and other steps will help restore confidence and "return our economy to the path of growth and prosperity."

The move follows similar action Monday by European governments.

Wall Street's rebound is expected to encourage investors after the Toronto Stock Exchange endured one of its worst weeks ever, with the main index dropping 16 per cent amid investor worries about falling commodity prices and a spreading economic recession.

Adding to optimism in Toronto were higher oil prices, as crude revived to above US$84 a barrel on hopes the economic fallout from the financial crisis can be limited.

The S&P/TSX composite index enters the week at 9,065.16 after shedding more than 535 points Friday.

Asian and European markets shot higher Tuesday.

Japan's Nikkei index, which like the TSX had been closed for a holiday on Monday, jumped 14.2 per cent, gaining 1,171.14 points to 9,447.57 - its largest increase ever.

Hong Kong's Hang Seng index rose 3.2 per cent, after advancing more than 10 per cent Monday.

The FTSE 100 jumped 5.7 per cent early in the afternoon in London, while Germany's DAX rose 5.2 per cent and the French CAC-40 rose 5.3 per cent.

Still analysts warn of ongoing volatility as investors grapple with the problems still facing the financial system and the global economy.

The Dow remains 34 per cent below its Oct. 9, 2007 record of 14,164.53, and many analysts shied away Monday from saying Wall Street had hit bottom.

Monday's gain followed eight-day losing streak that amassed point losses on the Dow industrials of just under 2,400 points, or 22 per cent, leaving the blue-chip index at its lowest level since April 2003.

Last week's 18.2 per cent plunge in the Dow was the worst in its 112-year history. Monday's advance far outpaced its previous record one-day advance of 499.19 late in the dot-com boom of 2000.