TORONTO - Toronto stock market investors have reason to feel pleased following a blowout week where higher commodity stocks were largely responsible for a four per cent gain, sending the TSX to its highest levels since early November last year.

However, the runup has some analysts worried that investors are getting the impression that the all-clear has somehow sounded and that markets are poised to resume racking up strong gains.

"I think Canada is going to be plagued by this kind of whipsawing effect that we have been seeing for a while because commodities giveth and commodities taketh away,'' observed Andrew Pyle, investment adviser for Scotia McLeod in Peterborough, Ont.

"We do get these nice little moves especially when oil hits record highs, but you know inevitably when we get an economic or fundamental report out that suggests things are weakening or global growth is slowing down, then commodities come right back down again and drag  the TSX lower.''

The market closed Friday about 17 per cent above the recent lows hit in late January.

Helping push the market higher were oil prices that hit a fresh record high of US$116.69 a barrel on Friday.

But agricultural stocks have also contributed to the latest gains, reflecting a sizable advance in the so-called soft commodities like wheat. Potash Corp. (TSX:POT) surged 10.7 per cent last week alone on word of a rich new export deal with China.

Even the much-battered financial sector made further inroads thanks to a quarterly earnings report at week's end from Citigroup showing lower losses than the previous quarter.

Underlying Pyle's concerns was the likelihood that the United States is in a recession and that the contraction will have an effect on commodity prices and the stocks associated with them.

And he points out that while higher energy prices are fine for oil stocks for now, it's not helping economic growth.

"This recession, which is housing-led and now I think is consumer-led, only gets worse as energy prices push higher,'' Pyle noted.

"That means less demand for global products, which means you continue to hit the regions that are expensive right now and that means Europe. And I don't see where you can maintain this type of upward thrust in commodities in that environment.''

On top of this, financial markets are still in a mess and the financial sector is still vulnerable to more big writedowns connected to the U.S. housing market.

"The next step is going to be what happens, what's the linkage between where we are right now in the financial mess or the credit mess and global growth,'' he said.

"And people are only now  starting to get their head around it, that things aren't as decoupled as the experts have tried to lead us believe.''

Meanwhile, the major item of economic news happens Tuesday when the Bank of Canada makes it next scheduled announcement on interest rates. Its main overnight rate now stands at 3.5 per cent.

"For certain, they're going to cut interest rates, that is unequivocal,'' said

Michael Gregory, senior economist at BMO Nesbitt Burns, said the central bank was widely expected to cut rates, but there was debate as to whether they will cut by a quarter or a half point, as the central bank last did on Mar. 5.

"There's no question but when you look at headline gross domestic product, it has weakened off considerably where we're growing less than one per cent at an annual rate,'' Gregory said.

"The problem is that that weakness is very much centred in the sort of the manufacturing/export sectors which are now facing not only the legacy of a strong Canadian dollar but increasingly in our view a recession in the U.S. which is an awful double whammy for that sector -- which is the issue the Bank of Canada has in that this is a major risk.'' 

The bank has been lowering rates since last December, when its key rate stood at 4.5 per cent and what it does next is uncertain.

"If they go 50 basis points, I think they will be a little ambiguous going forward, make it sort of a conditional we might have to go more, we'll see, and not really commit either way clearly,'' said Gregory.

"If they go 25 (basis points), they may leave