Dow, TSX gain ground in huge turnaround

Stock markets in Canada and the United States posted large gains in trading Thursday as a surprisingly strong afternoon recovery wiped out morning losses.

Toronto's TSX was up 430 points, or 4.8 per cent, to close the session at 9,352. The gain represented a marked turnaround from the morning, when the TSX scraped the 8,600 trading level.

Still, Canada's main index closed Thursday lower than the 9,424 level at which it ended Tuesday's trading session.

Oil stocks led the afternoon recovery as investors appeared to suddenly realize that crude issues could be purchased very cheaply, analysts said.

That situation was helped by oil prices, which rose $2.18 US to close Thursday at $58.34 a barrel.

As a result, EnCana, a huge oil producer, gained almost six per cent to end the trading session at $56.60. Tailsman Energy Inc. was up nearly five per cent to $89.61.

Gold companies also gained value, with Barrick Gold Corp. rising 12 per cent, or $2.54, to $23.35.

That improvement was despite a drop in the price of gold bullion, down $13.30 US to close at $705 US an ounce.

Strong New York

The story was the same for the Dow Jones Industrial Index. The Dow jumped 552 points, or 6.67 per cent, to close Thursday at 8,835.

The main New York index hit an intraday low of 7,973 in morning trading before beginning the climb towards positive territory.

In New York, analysts explained the later afternoon rally in technical terms, saying traders figured the 8,000 level was close to the bottom of the stock market.

Since equity markets tend to lead an economic recovery, aggressive stock purchasers often probe for the point where stock issues will keep their value even in the face of bad economic headlines.

And Thursday's U.S. economic news was not very good.

The number of initial jobless insurance claims hit a seven-year high and cracked the 500,000 level. As well, the country's trade deficit shrank in September, but mainly because American purchases of foreign goods fell by a greater amount than did U.S. export sales.