By James Langton

(September 14 – 13:00 ET) – Nortel Networks is wagging the TSE again today, an aggressive rally in the stock is pushing the index up. At midday the TSE 300 is up 264 points to 11,013, a 2.6% move, thanks to a 6% rally in Nortel.

Volume is strong at 106 million shares, though that’s courtesy of Videotron not Nortel. The volume is about 7:3 in favour of buyers, and advancers are outpacing decliners 7:6.

The Nortel story has pushed the industrials up 5% and that is enough to launch the entire TSE skyward. Several other groups are trading strongly on their own however, including conglomerates, media stocks, consumer products and financials. Miners, paper stocks and golds are taking the brunt of the return of the new economy stocks.

The Nortel is rebounding as investors come to the conclusion the company’s fundamentals are strong,, and the stocks has been oversold. A European rally in networkers isn’t hurting either, which came in the wake of the European Central Bank’s back-door currency defense. Nortel rivals Lucent and Nokia are up, too. Finally, Nortel announced a strategic alliance with InfoSpace Inc. Financial terms were not disclosed.

Following the Nortel rally are the rest of Canada’s high tech middleweights, JDS Uniphase, Research in Motion, Celestica, Creo, Alcatel and Ballard Power. Other tech movers include Microforum, up 3%, and Medisolution, up 16% after the Globe and Mail called it a takeover target.

Videotron is the top trader of the morning, moving more than 21 million shares so far. It’s up about 1.25% at the end of its takeover battle.

Financial stocks are moving today. The biggest gainer is Merrill Lynch, up 5%, on renewed takeover talk on Wall Street in the wake of the Chase-J.P. Morgan deal.

The hot trader however is Sun Life. The stock was actually outselling Nortel on the open this morning, at midday it is unchanged with more than 2.1 million shares crossing the tape. The vast majority of that trade in huge block trades early in the day, by 10:00 ET, HSBC had crossed 1.8 million shares of the stock. No news from the firm.

Manulife is active today too, up 50¢ on 1.5 million shares. Banks are all up in moderately active trading,too.

This morning Bank of Montreal announced a small acquisition in the face of the previous weeks’ monster deals in the U.S. It is buying Arizona-based Century Bank for US$16 million, a deal that expands its wealth management presence in a key snowbird state. Century Bank will become part of BMO’s private client group.

In New York, stocks are mixed again today. The Dow is down 50 points to 11,132. The Nasdaq composite is up 82 to 3,975. The S&P 500 has gained five to 1490. Oracle, which reports later today, is up, along with Nortel, Lucent, and chipmakers.

The CDNX is up 15 points to 3642 on volume of 20 million shares. Techs are driving the way up, while mines are weak and oils are indifferent. Fuel Cell Techs is the top trader again, up 17% to $5.45 on volume of 1.2 million.