TORONTO - The Toronto stock market was higher late Wednesday morning as investors bought back into energy and metals stocks after several days of selloffs on worries about slowing economic growth.

New York indexes were lower despite a well-received earnings report from aluminum giant Alcoa Inc. as investors focused on problems in the mortgage industry and a downgrade in the technology sector.

Toronto's S&P/TSX composite index was off early highs as energy sector gains moderated but was still up 91.28 points to 13,901.05.

The TSX had run ahead 97 points Tuesday - but that was preceded by two days of triple-digit losses that dipped the benchmark index into negative territory for the year.

"I think the pullback was warranted to a degree," said Gareth Watson, associate director and Canadian equity adviser at ScotiaMcLeod, who thinks the TSX will be limited to single-digit returns this year.

"You're going to see strength out of materials because I'm still believer in the agriculture story, still a believer in the gold story for the second half so I think materials will lead any type of increase here, potentially along with energy."

The TSX Venture Exchange was 10.94 points higher to 2,410.64.

The Canadian dollar rose 0.72 cent to 98.85 cents US.

Canada Mortgage and Housing Corp. reported that the seasonally adjusted annualized rate of housing starts was 217,800 units in June, down from 227,700 in May. For the first half of 2008, starts were up 1.5 per cent from a year earlier.

New York's Dow Jones industrial average declined 10.18 points to 11,374.03.

The Nasdaq composite index moved down 5.7 points to 2,288.74 and the S&P 500 index edged 0.17 of a point lower to 1,273.53.

Alcoa reported after the market closed Tuesday that its quarterly earnings slid 24 per cent from a year ago to US$546 million because of rising costs. But the profit of 66 cents per share beat analyst estimates by two cents and Alcoa shares gained 41 cents to US$32.74.

A negative analyst note about Cisco Systems Inc. weighed on the technology sector. Cisco fell 61 cents to US$22.27 after an RBC Capital Markets analyst cut his price target on the network equipment maker. Cisco's CEO recently said technology spending will recover later than previously thought and its shares declined 84 cents to US$22.04.

Meanwhile, U.S. government-sponsored lenders Freddie Mac and Fannie Mae continued their tumble. Freddie fell $1.16 to US$12.30, while Fannie fell 86.5 cents to US$16.75. The two companies have been dragging the broader market lower amid worries arose about their cash levels.

The TSX energy sector moved up 2.1 per cent after dropping more than five per cent in the previous two sessions as it tracked a drop of more than US$9 a barrel in the price of oil.

Prices were up slightly Wednesday morning as data from the U.S. Department of Energy showed a larger than expected 5.84 million-barrel drawdown in crude oil supplies last week. But gasoline inventories rose an equally unexpected 900,000 barrels.

The August crude contract on the New York Mercantile Exchange revived by 67 cents to US$136.71 a barrel.

Suncor Energy (TSX:SU) gained $2.01 to $59.27 while Canadian Natural Resources (TSX:CNQ) rose $1.04 to $89.92.

The battered base-metals sector was up 2.6 per cent with Teck Cominco Ltd. (TSX:TCK.B) up $1.12 to $42.70 and Fording Canadian Coal Trust (TSX:FDG.UN) ahead $3.65 to $80.25.

The TSX financial sector started off strong but by midmorning had sunk 0.35 per cent with Royal Bank (TSX:RY) down 49 cents to $45.51 and National Bank (TSX:NA) ahead 59 cents to $51.13.

Techs were also weak as Research In Motion Ltd. (TSX:RIM) dipped $1.37 to $122.38.

TSX heavyweight Potash Corp. (TSX:POT) also boosted the Toronto market, rising $4.54 to $223.76.

In Canadian earnings news, radio and specialty-TV operator Corus Entertainment Inc. (TSX: CJR.B) reported net income of $37.7 million in the March-May quarter, up 27 per cent from a year ago as revenue grew five per cent to $207.8 million. Corus shares gained 23 cents to $17.03.

MDS Inc. (TSX:MDS) is suing Atomic Energy of Canada Ltd. and the federal government, seeking $1.6 billion over the cancellation of the MAPLE medical-isotope reactor project. MDS shares dropped 31 cents to $15.52.

On overseas stock markets, Chinese shares rose for a third day, led by insurers and real estate developers.

The Shanghai composite index rose 3.75 per cent to 2,920.55, for a 10 per cent gain since its 16-month low on July 1.

"The fall of the market before was overdue. Today's rise was just a correction for the sharp fall," said strategist Qian Qimin at Shenyin and Wanguo Securities. "We still believe it is just a rebound and the market will meet strong pressure (against further price rises) at the 3,000 level."

In Hong Kong, the Hang Seng index gained 2.8 per cent.

Japanese shares were firmer after better-than-expected domestic machinery orders and Tuesday's rise on Wall Street, but gains were limited by worries about Iran's missile tests.

The Nikkei 225 index closed higher by a bare 19.03 points at 13,052.13 after losing more than 2.4 per cent a day earlier.

London's FTSE 100 index was up 74.1 points to 5,514.6. The German DAX index advanced 78.78 points to 6,383.19 and the Paris CAC-40 rose 48.84 to 4,324.45.

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