Source - AFX
By Jeffrey Jones 

    CALGARY, Alberta, Dec 31 (Reuters) - Toronto's main stock 

index jumped nearly 2 percent on Wednesday to end the worst 

year for Canadian stocks since the Great Depression on a 

positive note as oil prices staged a late-session rally. 

    The S&P/TSX composite index closed up 156.98 

points, or 1.8 percent, at 8,987.70 in a third-straight session 

of triple-digit gains. 

    That still translates into a full-year drop of 35 percent, 

the biggest for the stock market since 1931, according to TSX 

figures. The Dow Jones industrial average in the United States 

also had its worst performance since that year, falling 34 

percent. 

    'It's a positive day for a bad year, and we've had a few 

positive days now,' said Ian Nakamoto, director of research at 

MacDougall, MacDougall and MacTier in Toronto. 

    'It's nice to see green on the screen -- meaning go ahead 

-- as opposed to red -- stop and rethink your strategy.' 

    All 10 main subgroups ended higher, led by health care, up 

4 percent, information technology, up 3 percent, and consumer 

staples, up 2.5 percent. 

    The heavily weighted energy sector rose 1.7 percent, with 

Husky Energy, Nexen and Ensign Energy 

Services each gaining more than 3 percent. 

    Oil prices surged late in the session to end up $5.57, or 

14 percent, at $44.60 a barrel, lifted by concern about winter 

fuel supplies amid slowing refinery activity. 

    Despite the jump, crude is down more than $100 a barrel 

from its high set in July. Analysts have blamed the steep drop 

in oil and other commodities -- which were pressured by the 

global economic crisis -- for the brutal year for stocks. 

    Before the meltdown, Canada was riding a resource-driven 

boom with its abundance of oil, minerals and grain. 

    The year's worst performing TSX sector was information 

technology, which lost half its value as expenditures on tech 

gear dwindled. It was followed by financial services, which 

skidded 39 percent, and energy, which fell 38 percent. 

    Consumer staples, such as grocery store chains, suffered 

the smallest drop at about 8 percent. 

    Nakamoto said the weakness among banks and financial 

service firms was a surprise, as Canadians have viewed their 

financial system as one of the most stable in the world, while 

multibillion-dollar bailouts are the order of the day 

elsewhere. 

    'I don't think they got as hurt, but still the magnitude of 

the decline has caused Canadian investors to rethink that,' he 

said. 

    Which sector fares best in 2009 will depend on the 

performance of the economy. If a recovery begins in the next 

few months, commodity producers could rebound, he said. If not, 

look for consumer staples and other safe-haven names to remain 

in demand. 

    Many market observers expect to see signs of recovery in 

the second half of the year. 

    'The economic numbers will be worse, but the market numbers 

will start to look a lot better,' said Andrew Pyle, wealth 

advisor at ScotiaMcLeod in Peterborough, Ontario. 

    Much is dependent on improved credit markets and the effect 

of a new U.S. administration, he said. 

    'It's not out of the question to see the TSX putting on 20 

percent in the first six months of the year. The trick will be 

what happens when we get to these thresholds,' Pyle said. 

    Among big movers on Wednesday, Research in Motion, 

maker of the BlackBerry, jumped 4 percent to C$49.50. 

    Labopharm surged 39 percent to C$2.26 after it 

said it won its first U.S. regulatory approval for the 

once-daily chronic pain drug Ryzolt. 

    Oilexco was the most traded stock and biggest 

percentage loser, down 68 percent at 28.5 Canadian cents, after 

the oil explorer said its British unit faced insolvency.  

    The blue chip S&P/TSX 60 index closed up 8.92 

points, or 1.7 percent, at 541.82. 

    On Wall Street, the Dow rose 108.00 points, or 1.25 

percent, to 8,776.39, while the Nasdaq composite index 

ended up 26.33 points, or 1.7 percent, at 1,577.03. 

    ($1=$1.22 Canadian) 

 (Additional reporting by Ka Yan Ng and Allan Dowd; editing by 

Rob Wilson) 

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