TSX rallies on EU summit surprise; RIM drags

Fri Jun 29, 2012 4:43pm EDT
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By Allison Martell

TORONTO (Reuters) - Canada's main stock index rose in a broad rally on Friday after euro zone leaders agreed on measures to cut soaring borrowing costs in Italy and Spain and recapitalize banks, offsetting a sharp drop in Research in Motion Ltd RIM.TO.

Oil and other commodities rose on news of the deal, which was seen as a sign the euro zone is adopting a more flexible approach to solving a debt crisis that has hampered global growth. <O/R> <MKTS/GLOB>

"Expectations going into the summit were very low," said Elvis Picardo, strategist at Global Securities in Vancouver. "The feeling is that perhaps the EU (European Union) is taking the first concrete steps to actually come up with a solution to this whole mess."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 171.86 points, or 1.5 percent, at 11,596.56. The index closed up 1.4 percent for the week, in large part because of Friday's move.

The energy group played the biggest role in pulling the index higher, rising 2.8 percent as U.S. crude rose more than 9 percent, the biggest single-day percentage rise since March 12, 2009.

"Positive news coming out of the European summit very late last night is pushing up ... global commodity prices, and also riskier assets such as equities," said Patricia Mohr, vice president, economics and commodity market specialist at Scotiabank. "I don't think the financial markets were expecting very much progress."

Gold and copper rallied, and commodities were broadly higher. The Thomson Reuters-Jefferies CRB Index .CRB was up 4.6 percent. <GOL/> <MET/L>

The heavyweight materials group, which includes gold and base metal miners, rose 2.2 percent, and financial issues rose 1.4 percent.   Continued...

A Bay Street sign is seen at the financial district in Toronto, October 10, 2008. REUTERS/Mark Blinch