The Toronto stock market moved upwards Tuesday after oil prices showed signs of stabilizing.

The S&P/TSX composite index closed up 51.56 points to 14,195.73 as energy stocks began to recover. The Canadian dollar was up 0.32 of a cent to 87.41 cent

The reversal follows a 330-point drop on Monday caused by worries over oil. 

Buyers started to pick up bargains among companies  that have sustained a severe mauling because of a steep drop in oil  prices and other economic concerns.

U.S. indexes came back from a sharp drop but were still lower as the Dow Jones industrials fell 51.28 points to 17,801.2 and the S&P 500 index dipped 0.49 of a point to 2,059.82, while the Nasdaq gained 25.78 points to 4,766.47.

The TSX was down more than 100 points in early trading, but an apparent firming in oil prices helped to mediate the fall. The WTI contract traded in New York was up 77 cents to $63.82 US a barrel after tumbling almost $3 Monday in the wake of weak trade data from China.

Brent crude was up 26 cents to $66.45. On Monday, a report from Morgan Stanley suggested prices for Brent crude, an international benchmark, could fall to as low as $43 US a barrel next year.

That is about the breakeven point for U.S. shale oil, says McMaster University professor Atif Kubursi.

Countries like Saudi Arabia are letting oil prices fall to beat back the enormous surge in U.S. oil production, he told CBC News.    

"The $42 or $43 is the break-even point. This is exactly the price at which the shale oil producers would break even, would recover back from shale oil what it cost them to produce it," he said.

Markets are now trying to work out a huge imbalance in supply and demand, made even more troublesome by the decision by the OPEC oil cartel to leave production levels unchanged.

The TSX energy sector closed up 1.13 per cent Tuesday — but the component, which makes up 23 per cent of the TSX, is still under water almost 20 per cent year to date​. It was up about 20 per cent mid-summer at a time when oil averaged around $105 US a barrel.

Dividend, budget cuts

Canadian energy companies continue to be impacted by plunging oil prices. Baytex Energy is cutting its monthly dividend by more than half to 10 cents a month. It also cut its 2015 spending plans by 30 per cent from original tentative plans. Baytex is also cutting production but its shares gained 35 cents to $16.81.

Baytex follows Precision Drilling Corp., Vermilion Energy Inc. and Trilogy Energy Corp. in announcing reduced capital budgets for next year, as a result of the major drop in oil prices. Trilogy also suspended its dividend payment.

Talisman Energy Inc. said several parties including Spanish energy company Repsol have approached the oil and gas producer about potential deals. Talisman and Repsol held inconclusive talks during the summer but the Calgary company's shares have plunged about 60 per cent since then, making it a more attractive takeover target. Its shares rose eight per cent to $4.67.

The gold sector provided some lift to the TSX, up 2.8 per cent while February gold gained $24.50 to $1,219.40 US an ounce.

The base metals sector declined one per cent while March copper was unchanged at US$2.89 a pound.

Fed concerns were back on the front burner ahead of the central bank's meeting on interest rates next week. The Wall Street Journal said Fed officials will likely affirm a plan to start raising short-term interest rates in 2015 and are debating eliminating a key phrase — that rates will stay low for "a considerable time."

That gave rise to doubts over how long cheap rates will linger as the U.S. economy appears to strengthen,

Elsewhere, Hudson's Bay Co. had a quarterly net loss of $13-million or seven cents a share and "normalized" earnings of $116 million, both improvements from the same time last year. Retail sales nearly doubled to $1.91 billion from $984 million a year earlier and its shares fell 83 cents to $22.66.