TSX ends up 1 percent as gold miners rally

Wed May 23, 2012 6:14pm EDT
 
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By Jon Cook

TORONTO (Reuters) - Canada's main stock index advanced for the second straight day on Wednesday, rallying with gold and base-metal mining shares to dig itself out of an early hole as mounting fears about the euro zone economy and China rattled markets.

The index surged nearly 300 points, or 2.6 percent, after nearly hitting a 2012 low at 11,260.04 early on Wednesday as worries about Greece's possible exit from the euro zone sparked a broad sell-off in equities.

The rebound was led by the gold mining subgroup, which jumped more than 4.5 percent, as a plunge in bullion near key technical support levels around $1,525 an ounce prompted buying of oversold gold stocks.

"Maybe now the sell-off has gone far enough and people are working out that gold does have some role as a traditional safe haven," said Gavin Graham, president at Graham Investment Strategy. "With that being about 12 percent of the total TSX market capitalization, it helps."

Gains were led by top gold producers Barrick Gold, up 5.5 percent at C$40.55, and Goldcorp Inc, which rose 7 percent to C$38.40.

Other gold miners were not as fortunate. Romarco Minerals plummeted almost 25 percent near a three-year low at $0.61 on Wednesday after the small cap miner said a federal wetland permit for its flagship gold project in South Carolina will take longer than it expected.

The Toronto Stock Exchange's S&P/TSX composite index finished up 113.02 points, or 1 percent, at 11,564.80, its highest close in nearly two weeks.

It was the TSX's first two-day upswing in more than three weeks and just its fifth positive session this month.   Continued...

 
A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch