TSX rises with hope for "fiscal cliff" deal
By Allison Martell
TORONTO (Reuters) - Canada's main stock index rose more than 1 percent on Monday, boosted by the materials sector, as U.S. lawmakers pushed for a last-minute agreement to avoid the "fiscal cliff" that could put the U.S. economy into recession.
Gold rallied in the afternoon after news of a potential deal, and held its gains as President Barack Obama said a deal to prevent the tax hikes and sharp spending cuts was in sight, but not yet complete.
"As always, they leave it to the very last moment, and then something almost invariably emerges, even if it's not the major, game-changing plan that they wanted," said Gavin Graham, president at Graham Investment Strategy.
Graham said investors were likely buying gold because of inflation that could follow a resolution of the U.S. budget dispute. Gold is seen as a hedge against inflation. <GOL/>
He said upbeat manufacturing data out of China was also helping the Canadian market: "It's evident now that China is emerging from its slowdown."
That data boosted iron ore and copper prices, and Teck Resources Ltd (TCKb.TO: Quote), Canada's largest diversified miner, was an influential gainer on the TSX, rising 3.5 percent to C$36.29.
At 3:00 p.m. the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 138.77 points, or 1.1 percent, at 12,454.89. The index was on track to finish up about 4 percent for the year.
"If you're a Canadian and you bought the index, you got killed by the commodities this year," said David Baskin, president of Baskin Financial Services. "You got whacked by the gold stocks." Continued...