TSX hits one-week high as Nexen jumps on deal approval

Mon Dec 10, 2012 5:04pm EST
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By John Tilak

TORONTO (Reuters) - Toronto's main stock index hit a one-week high on Monday, led by a rally in Nexen Inc NXY.TO and Progress Energy Resources Corp (PRQ.TO: Quote), after Canada approved foreign bids for both energy companies while also imposing limits on takeovers in the sector.

Nexen shares jumped 13.8 percent to C$26.77 after Ottawa approved a $15.1 billion bid from CNOOC Ltd (0883.HK: Quote), China's third-largest oil company. Progress Energy, whose $5.3 billion takeover by Malaysian state-owned energy company Petronas was also approved, surged 13.4 percent to C$21.96.

Gains in those two stocks and the broader energy sector outweighed the impact of new restrictions on some investments in the oil sands sector that hurt shares of some smaller players.

The Conservative government said on Friday it would block virtually all new attempts by foreign state-owned enterprises to buy assets in the sector.

"It was a well-crafted decision. Overall people are satisfied. The primary concern here revolves around the fact that state-owned enterprises are, unlike free-market companies, competing with an unfair advantage," said Michael Sprung, president of Sprung Investment Management.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 70.88 points, or 0.58 percent, at 12,230.47. Earlier in the session the index touched 12,236.71, its highest point since December 3.

All 10 main sectors on the index ended higher, with the energy sector up 0.9 percent and materials gaining 1 percent.


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