TSX rises by most since May as BoE 'calms nerves'

The facade of the original Toronto Stock Exchange building is seen in Toronto

(Corrects date in third paragraph to March 2021, not March 21)

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index posted on Wednesday its biggest gain in four months, led by resource and technology shares, as bond yields tumbled globally on the Bank of England's move to support Britain's beaten-down government debt market.

The Toronto Stock Exchange's S&P/TSX composite index ended up 341.01 points, or 1.9%, at 18,648.92, its biggest advance since May 13.

On Tuesday, it posted its lowest closing level since March 2021 at 18,307.91 as investors worried that higher global borrowing costs could derail economic growth.

Wall Street also ended sharply higher on Wednesday following its recent sell-off, as the BoE said it would buy long-dated British bonds in a move aimed at restoring financial stability in markets rocked globally by the fiscal policy of the new government in London.

The Bank of England's move "seemed to calm nerves, at least for now," Jennifer Lee, senior economist at BMO Capital Markets, said in a note.

"There is a limit to what the BoE can do, given that it is buying at the long-end, and raising rates at the short-end. This is not sustainable."

The energy sector jumped 4.1% as the price of oil settled 4.7% higher at $82.15 a barrel, helped by U.S. fuel inventory figures showing larger-than-expected drawdowns and a rebound in consumer demand.

The materials sector, which includes precious and base metals miners and fertilizer companies, gained 4.4% as gold and copper prices climbed, while technology ended 2.9% higher.

Despite the rally, the TSX was on course to fall 3.5% in September. It was also headed for its second straight quarterly decline.

(Corrects date in third paragraph to March 2021, not March 21)

(Reporting by Fergal Smith; Additional reporting by Shashwat Chauhan; Editing by Arun Koyyur and Alistair Bell)