Toronto stocks end week with 100-point surge

TORONTO, Sept 21 (Reuters) - Toronto stocks rose strongly on Friday as energy issues rebounded from two days of weakness, while investors tried to set aside worries about growth and inflation following Tuesday's U.S. rate cut.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE: Quote, Profile, Research) rose 101.64 points, or 0.7 percent, to close at 13,940.07. For the week, the market rose 0.7 percent.

Energy shares, hammered in the past couple of sessions following an Alberta government panel's recommendation to increase oil and gas royalties, climbed 1.3 percent, even as oil prices came off the record levels hit on Thursday.

"I think people are saying that this Alberta thing isn't law yet and these stocks have been beaten up pretty badly," said John Kinsey, portfolio manager at Caldwell Securities in Toronto.

Canadian Natural Resources (CNQ.TO: Quote, Profile, Research) rose C$1.64, or 2.2 percent, to C$76.84, while Suncor Energy (SU.TO: Quote, Profile, Research) climbed C$1.76, or 1.9 percent, to C$96.

All told, eight of the TSX's 10 main subgroups rose, with strength also evident in the consumer discretionary and consumer staples sectors, which each climbed 1.3 percent.

The U.S. Federal Reserve's 50 basis point rate cut earlier in the week boosted stocks, but analysts said it also suggested the Fed was much more worried about the U.S. subprime mortgage market and tight liquidity than previously thought.

The move also sparked worries that that inflation could rear its ugly head, which prompted selling over the past couple of sessions.

But investors may have overreacted in their caution, analysts said.

"Our view is that the fundamentals are still reasonably positive and the Fed is going to supply liquidity to the system," said Irwin Michael, portfolio manager at ABC Funds.

He said sluggish end-of-week trading volumes and portfolio adjustment ahead of the end of the fiscal quarter were also playing a role in the market's overall direction.

Among individual stocks, Potash Corp. (POT.TO: Quote, Profile, Research) climbed C$5.01, or 5.1 percent, to C$103.10, while Research In Motion (RIM.TO: Quote, Profile, Research) gained C$2.65, or 2.9 percent, to C$93.03.

One of the few areas of weakness were gold stocks, which gave back some of their robust weekly gains.

In the U.S., the Dow Jones industrial average (.DJI: Quote, Profile, Research) rose 53.49 points, or 0.4 percent, to 13,820.19, while the Nasdaq composite (.IXIC: Quote, Profile, Research) climbed 16.93 points, or 0.6 percent to 2,671.22.

The blue chip TSX 60 index (.TSE60: Quote, Profile, Research) rose 0.9 percent to 809.11.

While the rise of the Canadian dollar to parity with the U.S. currency did not seem to have any immediate impact on the markets, analysts warned it could hurt exporters down the road, including resource producers who pay their workers in Canadian dollars and earn their revenues in U.S.-denominated commodities.