Markets in Toronto made strong gains Tuesday in response to the Bank of Canada’s 0.25% rate cut. In New York, markets opened sharply lower after yesterday’s holiday shutdown, but clawed back much of the early loss after the Federal Reserve announced a surprise cut to U.S. rates.

The Fed slashed its target for the federal funds rate by 75 basis points to 3.5%.

In Toronto, the S&P/TSX Composite index closed up a whopping 508.76 points, or 4.19%, at 12,640.89.

Every sector finished higher, led by resource issues. The TSX materials group gained 8.4%.

The gold sub-group gained 7.47%.

Gold for February delivery rose US$8.60 to end at US$890.30 an ounce on the New York Mercantile Exchange.

Barrick Gold led the charge, gaining $4.87, or 10.29%, to close at $51.25.

The energy group rose 2.81%, even as crude oil for March delivery ended down 71¢, or 0.8%, at US$89.21 a barrel, on the Nymex.

The heavyweight financials group gained 3.67%.

The Bank of Nova Scotia shares climbed $2.50, or 5.72%, to close out at $46.20.

The Royal Bank of Canada shares rose $2.87, or 6.25%, ending the day at $48.79.

TD Bank gained $3.62, or 5.89%, closing at $65.10.

For a second day, Bombardier Inc. was the session’s big mover. The company’s stock gained 37¢, or 8.71%, to end another day of heavy trading (16,891,071 shares) at $4.62.

The junior S&P/TSX Venture composite index also finished higher, gaining 75.41 points, or 3.16%, to end the session at 2,465.93.

The Canadian dollar closed out US97.27ç, up 0.46 of a cent.

On Wall Street, the Fed rate cut stemmed the tide of losses, but U.S. markets still ended the day down for the fifth session in a row.

The Dow Jones industrial average lost 128.1 points, or 1.1%, to end the session at 11,971.2.

The S&P 500 fell 14.69 points, or 1.1%, to close at 1,310.50 while, the tech-heavy Nasdaq composite dropped 47.75 points, or 2%, to end at 2,292.27.