Banks lift TSX on Cyprus hopes; BlackBerry falls

Sun Mar 24, 2013 9:09am EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index advanced on Friday as hopes that Cyprus will strike a bailout deal before a looming deadline boosted financial shares and helped offset an 8 percent fall in BlackBerry (BB.TO: Quote).

Shares of BlackBerry stumbled as it faced a difficult challenge launching the sale of its new smartphone in the United States.

The European Central Bank gave Cyprus until Monday to raise billions of euros to secure an international bailout, which could help the country avert a default and banking meltdown. With the Parliament having rejected one deal, investors were eyeing what is expected to be a hectic weekend of negotiations.

The Cyprus predicament has highlighted risks to the economic recovery in the broader euro zone, and investors fear that the failure to cut a deal could have a ripple effect in other countries.

"The Cypriots do not hold a lot of cards in this game of brinkmanship, especially after coming back empty-handed from Moscow," said Stephen Wood, chief market strategist, North America, at Russell Investments, which has more than $162 billion in assets under management.

"Our biggest concern about Cyprus would be, 'Does it have a contagion consequence in Spain or Italy?'," he added. "Right now it doesn't appear to be the case."

For now, investors are largely assuming that lawmakers in the island will work this out somehow. The Toronto market's gains followed declines in three of the previous four sessions.

"People seem to have become more optimistic as the week has progressed," said Colin Cieszynski, senior market analyst at CMC Markets. He noted that investors are taking an approach that the negotiators will "come up with a new bailout plan and not just let the whole thing spiral out of control."   Continued...

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