*US Fed set to announce interest rate cut decision
*Nexen rallies after quarterly profit beats expectations
(Adds quote, details, updates figures)
By Jennifer Kwan
TORONTO, Oct 29 (Reuters) - The Toronto Stock Exchange's main index rallied on Wednesday morning as commodity stocks got a lift from underlying prices, and as hopes rose that the U.S. Federal Reserve and other central banks would cut interest rates further to try to revive global growth.
Heavily-weighted stocks that helped to push the market higher included oil company EnCana Corp (ECA.TO: Quote, Profile, Research, Stock Buzz), which rose 6.3 percent to C$58.99, and insurer Manulife Financial (MFC.TO: Quote, Profile, Research, Stock Buzz), which was up 8.6 percent to C$25.52.
Also providing encouragement was the expectation that the U.S. Federal Reserve will chop its benchmark interest rate by at least 50 basis points later on Wednesday, which would take the fed funds rate down to 1 percent.
Typically, after a gain such as the one logged on Tuesday investors would be inclined to take profits, said Douglas Davis, president at Davis-Rea. However, investors are hoping for further rate cuts.
"The U.S. Fed is going to announce an interest rate cut this afternoon," he said. "This is bad for the U.S. dollar and good for resource stocks."
Energy and materials stocks make up about 40 percent of the key index's total weighting.
Shortly after 10:30 a.m. (1230 GMT), the S&P/TSX composite index .GSPTSE was up 225.89 points, or 2.47 percent, at 9,377.52, with eight of its 10 main groups higher.
The heavily-weighted energy sector rose 5.9 percent as the price of crude rose above $66 a barrel, tracking a rise in global equity markets [MKTS/GLOB] on expectations of more interest rate cuts. [ID:nN28430415]
Nexen Inc (NXY.TO: Quote, Profile, Research, Stock Buzz) rose 18.5 percent to C$19.25 after Canada's No. 4 independent oil explorer said quarterly profit more than doubled and beat market expectations. [ID:nBNG218049]
Suncor Energy (SU.TO: Quote, Profile, Research, Stock Buzz) rose 7.1 percent to C$27.20, even after it reported a lower-than-expected rise in profit.
Materials climbed 6.9 percent as gold and base metals prices rose. Agnico-Eagle (AEM.TO: Quote, Profile, Research, Stock Buzz), which is expected to report quarterly results later in the day, was up 6.7 percent at C$32.62.
The financial services sector climbed 0.7 percent.
After the market close on Tuesday, Canada's insurance regulator said it will ease guidelines on the capital that insurers need to set aside for guaranteed payments on segregated funds, lifting a concern that weighed on their share prices during the recent equities market plunge.[ID:N28412537]
Elsewhere, BCE Inc (BCE.TO: Quote, Profile, Research, Stock Buzz)(BCE.N: Quote, Profile, Research, Stock Buzz) posted a lower quarterly profit due mostly to restructuring charges and said a plan to make it a private company was on schedule to be completed by Dec. 11. The telecommunications giant is being taken private in a C$34.8 billion buyout [ID:nN28399225]. The stock was down 2.1 percent at C$34.24.
Maple Leaf Foods (MFI.TO: Quote, Profile, Research, Stock Buzz) rose 4.9 percent to C$7.52. Earlier, the company posted a quarterly loss as charges mounted from a recall of tainted meat that the company said was now complete. [ID:nN29453287] ($1=$1.25 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)
