TORONTO — The Toronto stock market racked up its second big triple-digit gain this week on Thursday as commodity stocks rose in response to the latest reading on the Chinese economy, which in turn helped suppress nervousness about the U.S. economic slowdown.

New York markets also gained traction despite news that Fitch Ratings lowered its rating on bond insurer Security Capital Assurance Ltd. Bond insurers have been hurt in the fallout from the mortgage and credit crises, and news of their problems has shaken the market.

The relatively stable performance on the stock markets Thursday comes after three wild sessions that featured swings of hundreds of points either way on worries about whether interest rate cuts can stop the U.S. from slipping into recession.

"I don't know that I would say a bottom is in sight,'' said Jennifer Dowty, portfolio manager at MFC Global Investment Management.

"The magnitude of this credit crunch has yet to be determined and that's what has created a lot of uncertainty with investors and a lot of market volatility as a result. ''

After recent sharp losses, investors took Toronto's S&P/TSX composite index up 249.83 points to 12,907.23. It soared 509 points Monday, following a 605-point tumble on Monday.

The improvement on stock markets also helped send the Canadian dollar soaring 1.7 cents to 99.39 cents US..

"What we've tended to see is a high correlation between how equity markets trade and the Canadian dollar trades,'' said George Davis, senior technical analyst at RBC Capital Markets.

"And until the beginning of this week, the downdraft in equity markets had sent the loonie lower and now that we've gotten interest-rate cuts from the Federal Reserve, the markets seemed to have stabilized a bit and the correction higher in equities is allowing the dollar to rise as well as we see risk appetite return to the market.''

Commodity stocks supported the TSX on news that China's economy grew 11.4 per cent in 2007, its fastest expansion in 14 years, driven by a boom in exports and investment, but growth slowed slightly toward the end of the year.

"The rally is being driven by those cyclical commodity stocks because the fear was this is not just a U.S. recession we're facing, it's a global economic slowdown,'' added Dowty.

"That gave investors confidence that the global growth is still intact.''

Despite Thursday's rise, the Toronto market's main index is still down 6.3 per cent since the start of the year.

The TSX Venture Exchange advanced 93.38 points to 2,533.72.

On Wall Street, the Dow Jones industrials gained 108.44 points to 12,378.61.

The Nasdaq composite index moved up 44.51 points to 2,360.92 and the S&P 500 index popped up 13.47 points to 1,352.07 as investors also appeared pleased by a widely anticipated agreement between Congressional leaders and the White House on an economic stimulus package.

The deal calls for tax rebates of US$600 to $1,200 per family and business tax cuts.

There was another stark reminder of the miserable state of the American housing sector.

The National Association of Realtors announced that U.S. sales of existing homes fell 2.2 per cent in December, capping a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years.

The median home price dropped for the entire year, the first time that has occurred in four decades.

On Thursday afternoon, the TSX energy sector moved up 3.3 per cent as the March crude contract in New York advanced $2.42 to US$89.41. EnCana Corp. gained $1.53 to $63.83 and Suncor Energy (TSX:SU) gained $4.78 to $90.50.

The base metals sector moved up five per cent, taking Teck Cominco Ltd. (TSX:TCK.B) up $1 to $31.25 and HudBay Minerals (TSX:HBM) gained $1.12 to $16.05.

The March bullion contract moved ahead $22.70 to US$905.80 an ounce, taking the gold sector up 3.8 per cent with Barrick Gold (TSX:ABX) ahead $1.60 to $51.02 and Kinross Gold Corp. (TSX:K) rose $1.77 to $22.67.

Financials were the major decliner, losing 0.72 per cent following a solid gain Wednesday as Bank of Montreal (TSX:BMO) moved up 44 cents to $56.29 and Royal Bank (TSX:RY) declined $1.01 to $49.98.

Telecom stocks were higher with BCE Inc. (TSX:BCE) ahead $1.41 to $36.76 after the Ontario Teachers Pension Plan maintained its takeover of the company is going ahead.

Investors also found reason for optimism from some strong earnings reports.

Fertilizer giant Potash Corp. of Saskatchewan Inc. (TSX:POT) has more than doubled its fourth-quarter profit to a company record US$376.8 million, from $186 million a year ago. The quarterly results boosted full-year net income to a record US$1.1 billion or $3.40 a share, compared with US$631.8 million or $1.98 per share in 2006.

Its shares jumped $8.05 to $129.93.

However, Ford Motor Co. says it lost US$2.7 billion in the fourth quarter as weakness in North America offset gains in markets elsewhere. Excluding special items, Ford's results fell just short of Wall Street's expectations.

European markets also staged a strong comeback Thursday as London's FTSE 100 index ran ahead 4.75 per cent, Frankfurt's DAX 30 jumped 5.93 per cent and France's CAC-40 gained six per cent.

On the TSX, advances beat declines 1,197 to 480 with 181 unchanged as 480.4 million shares traded worth $9.08 billion.