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Rising oil prices helped boost the energy sector as Canada’s main stock index headed higher on the first trading day of the year after sinking earlier in the session as fears about global growth fuelled investor jitters.

Just before noon, the S&P/TSX composite index was up 35.64 points, or 0.25 per cent, at 14,358.50 after falling sharply at the open.

The Canadian dollar traded for 73.50 cents US compared with an average of 73.30 cents US on Monday to close out 2018.

Oil prices rose 3 per cent on Wednesday, tracking U.S. equity markets that also pared some earlier losses, but traders said concerns about rising crude production and weakening global economic trends were likely to keep rallies contained.

Brent crude futures rose US$1.69, or 3.2 per cent, to US$55.46 a barrel after earlier falling as low as US$52.51. U.S. West Texas Intermediate (WTI) crude futures gained US$1.37 to US$46.78 a barrel, a 3-per-cent gain, after sinking to US$44.35.

The energy sector rose 1 per cent as oil prices bounced, with Crescent Point Energy up 4.1 per cent, Encana up 2.4 per cent and Husky Energy up 2.1 per cent.

Health care stocks, which include marijuana producers, rose 3.2 per cent, with Bausch up 6.2 per cent after brokerage Piper Jaffray upgraded the stock to “overweight” from “neutral.”

Aphria gained 3.8 per cent amid a controversial takeover offer from Green Growth Brands Ltd., and Aurora Cannabis rose 2.8 per cent.

Norbord Inc. fell 4.6 per cent plunge after Bank of America Merrill Lynch lowered its price target on the stock.

U.S. equity markets pared some losses in late morning trade, clawing back from losses of more than 1 per cent earlier, helped by energy stocks as oil prices reversed earlier losses and bank stocks as 10-year U.S. treasury yields moved off a near year-low. Crude futures have recently tracked closely with Wall Street.

“Energy markets are following lockstep with what the equity markets are doing here, and I think that’s going to continue to be the case,” said Brian LaRose at ICAP Technical Analysis.

However, disappointing manufacturing data from China earlier added to ongoing concerns about a slowing global economy and increased output out of countries like Russia.

Just before noon, the Dow Jones Industrial Average was down 23.48 points, or 0.1 per cent, at 23,303.98, while the S&P 500 was off 5.64 points, or 0.22 per cent, at 2,501.83. The Nasdaq Composite was up 2.61 points, or 0.03 per cent, at 6,637.36.

Earlier, stocks were down more than 1 per cent , as weak data in Asia and Europe confirmed fears of a global economic slowdown while the U.S. government shutdown dragged on.

China’s factory activity contracted for the first time in 19 months in December, hit by the Sino-U.S. trade war, with the weakness spilling over to other Asian economies. Euro zone manufacturing activity dropped for the fifth month and barely avoided contraction.

The grim readings come ahead of the closely watched U.S. manufacturing survey on Thursday, payrolls data on Friday and the U.S. earnings season later this month, which is expected to show corporate profit shrunk in the October-December quarter.

“Increasing evidence of China’s economy weakening further has sent chills throughout global markets. This fear has been a depressing factor for the markets,” Peter Cardillo, chief market economist at Spartan Capital Securities, said in a client note.

Six of the 11 sectors were up at midday.

The tech index slipped 0.15 per cent, with Microsoft Corp and Netflix down nearly 1 per cent and and Apple Inc flat. Amazon.com Inc was up 1.4 per cent but the consumer discretionary sector edged up 0.6 per cent.

Healthcare, 2018’s best performing sector, dropped 1.3 per cent, while energy, last year’s worst performing sector, added 2.1 per cent as oil prices rebounded.

A low appetite for risk sparked demand for U.S. Treasuries, sending yields on 10-year debt to a 12-month low of 2.6470 per cent.

Meanwhile, the U.S. Congress is set to reconvene with no signs of a workable plan to end a 12-day-old partial shutdown and Trump not budging on his demand for US$5-billion to fund a border wall. A Democrat plan to approve a two-part spending package does not include these funds.

Tesla Inc sank 6 per cent after the electric car maker delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the United States in response to the loss of a green tax credit.

With files from Reuters