4 Min Read
TORONTO (Reuters) - Toronto's main stock index notched its biggest gain since early January on Thursday, recovering from a string of losses as investors scooped up beaten down financial and commodity shares after lower yields on some euro-zone debt and rumors of a strong report on Chinese growth.
Gold miners were also sharply higher. Eldorado Gold (ELD.TO) spiked more than 11 percent to C$14.37 after the company said it expects annual gold production to touch 1.7 million ounces within five years as it brings new mines into production.
"It's been a pretty nice bounce-back the last couple of days but ... my prediction is we're going to move somewhat sideways for the next while," said Michael Sprung, president at Sprung & Co. Investment Counsel.
"We're still facing some severe problems over in Europe that have got to be addressed and I think just as economic news continues to come out the markets are going to over react, both on the positive and negative side."
The Toronto stock market hit its lowest level of the year this week and is up only 2 percent for 2012.
"The (commodity) stocks have been lagging very badly. The gold stocks have been discounting about $1,000 gold and oil stocks have been discounting about $80 oil and ... some of the (base metals) just got ridiculously cheap," said John Kinsey, portfolio manager at Caldwell Securities.
"They are nowhere near caught up yet, so hopefully they've put in a bottom."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 187.89 points, or 1.56 percent, at 12,214.65. Earlier it hit a high of 12,230.54, its strongest level since January 3.
It was the second advance for the index after a five-day slide.
Benchmark bond yields in Italy and Spain dropped following this week's Italian debt auctions, while the euro hit a one-week high against the U.S. dollar, indicating a reduction in near-term concern about Europe's debt troubles.
Market participants also cited expectations that China's gross domestic product data, due tonight, would surprise on the upside as a reason for gains in basic materials shares. But some were skeptical of this rumor.
Investors on Thursday were also buoyed by encouraging remarks by U.S. and European policymakers in the previous session.
European Central Bank executive board member Benoit Coeure sought to calm nerves about European debt markets, saying the ECB still has its bond-buying program as an option to ease funding pressures for indebted countries.
Also on Wednesday, the U.S. Federal Reserve's influential vice-chair Janet Yellen said the Fed's ultra-easy monetary policy was appropriate given high unemployment and the headwinds facing the economy, and left the door open to further action if needed.
"Investors always forget that policymakers and government officials have the ability to intervene in times of stress and adding some calming words doesn't hurt," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
In a sign that the U.S. labor market's recovery may be stalling, government data showed new U.S. claims for unemployment benefits rose unexpectedly last week to their highest level since January.