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TSX posts biggest gain in 2-1/2 years on energy boost

FILE PHOTO: The Toronto Stock Exchange sing is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Gains in energy shares helped Canada's main stock index kick off the final quarter of the year with a bang as investors looked to overcome their anxiety over a global recession.

The Toronto Stock Exchange's S&P/TSX composite index ended up 436.97 points, or 2.4%, at 18,881.19, its biggest daily gain since April 2020, allowing it to recoup some recent declines. It fell 4.6% in September.

Wall Street stocks also ended with sharp gains after being pressured through much of this year by worries that aggressive interest rate hikes by the Federal Reserve could derail economic growth. The Bank of Canada has also been tightening at a rapid pace.

"Investors are starting to doubt central banks globally will remain aggressive with fighting inflation as financial stability risks are growing," Edward Moya, senior market analyst at OANDA, said in a note.

British Prime Minister Liz Truss was forced into a humiliating U-turn after less than a month in power, reversing a cut to the highest rate of income tax that helped spark turmoil in financial markets.

In Canada, domestic data showed that manufacturing activity contracted for a second straight month in September as higher borrowing costs and an uncertain economic outlook contributed to a drop in new orders.

Boosting the Toronto market, the energy sector climbed 5.8% as crude prices settled 5.2% higher after Reuters reported that OPEC+ is considering reducing output by more than 1 million barrels per day.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 2.1% as gold and copper prices rose.

The heavily-weighted financial sector gained 1.4%, while industrials ended 2.7% higher.

Among stocks that lost ground was Saputo Inc. It fell 3.1% after Scotiabank cut the shares of the dairy firm to sector perform from sector outperform.

(Reporting by Fergal Smith; Additional reporting by Shashwat Chauhan; editing by Uttaresh.V, Anil D'Silva and Deepa Babington)