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TSX drops into bear territory

Frank Gunn/THE CANADIAN PRESS

Canada's benchmark index held onto substantial gains in midday trading on Tuesday as the damage from Hurricane Sandy looked manageable and the New York Stock Exchange announced that it would likely reopen for trading on Wednesday morning.

Shortly after noon, the S&P/TSX composite index was up 76 points or 0.6 per cent, to 12,389.

This marked the second straight day that the TSX has had to operate alone, without the help of U.S. trading to set a direction for stocks. The NYSE suspended trading on Monday as the hurricane neared landfall. In Europe, stocks also moved higher. The U.K.'s FTSE 100 rose 0.9 per cent and Germany's DAX index rose 1 per cent.

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"Bigger picture, there is every reason to believe that the hurricane won't kick the legs out of an already-fragile US economy," said Beata Caranci, deputy chief economist at Toronto-Dominion Bank, in a note.

Investors were not only relieved that the damage from the storm was within expectations. There was also upbeat economic news to digest: The S&P/Case-Shiller home price index for 20 U.S. cities rose 2 per cent in August, year over year – or slightly better than expectations and renewing hope that the housing market is steadily improving, albeit from low levels.

Within the TSX, the gains were broad. Materials, consumer discretionary stocks and telecom stocks rose 0.6 per cent each. Energy stocks and financials rose 0.5 per cent each.

Petrobank Energy & Resources Ltd. rose 7.6 per cent after announcing that it will spin off its 57 per cent stake in PetroBakken Energy Ltd.

SNC-Lavalin Group rose 3.1 per cent after it struck a deal with Japan's Hitachi to take over a project to build two nuclear power stations in the U.K.

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