TSX hits 2-month high on ECB hopes, TMX shares jump
By Jon Cook
TORONTO (Reuters) - Canada's main stock index hit a two-month high on Wednesday, led by financial shares, which gained on hopes major central banks will provide more monetary stimulus to help counter the drag from the euro zone crisis.
The rise followed the Toronto Stock Exchange S&P/TSX composite index's .GSPTSE biggest single-day gain this year on Tuesday, when hopes for easing by central banks outside of Canada also drove the rally.
Nearly all of the Canadian market's 10 main sectors were higher. The financial group led gains, rising 0.7 percent as investors anticipated the European Central Bank will cut rates and may also inject fresh funds to help boost the region's struggling economy.
"We've seen better strength in the price of bank stocks and that's a key indicator on Europe," said Arthur Salzer, chief executive of Northland Wealth Management. "You're starting to see that liquidity come back to the market and the risk trade come on."
Canada's major lenders were the main benefactors of the central bank hopes, with Royal Bank of Canada (RY.TO: Quote) climbing 1.2 percent to C$53.72, Bank of Nova Scotia (BNS.TO: Quote) rising 1 percent to C$53.84, and Bank of Montreal BMO.TO up 0.7 percent at C$57.77.
But Wednesday's volumes were light with U.S. markets closed for the Independence Day holiday and investors cautious ahead of policy decisions from the ECB and the Bank of England on Thursday.
Weak euro zone data on Wednesday added to expectations of a rate cut. Activity in Germany's services sector unexpectedly stagnated in June, while business expectations in France slumped to the lowest level in three years.
The TSX finished up 65.12 points, or 0.55 percent, at 11,913.87. The index at one point hit 11,936.16, its highest level since May 4. Continued...