Safeway deal helps TSX bounce strongly from 7-week low
By Peter N Henderson
TORONTO (Reuters) - Canada's main stock index rebounded on Thursday following two sessions of steep losses, helped by a jump in Empire Co Ltd (EMPa.TO: Quote) after the company said it will buy Safeway Inc's SWY.N Canadian assets for $5.7 billion.
Shares of Empire, the operator of grocery chain Sobeys, jumped nearly 10.6 percent after investors and analysts cheered the move, which will nearly double the company's reach in Western Canada.
The Toronto market also received a lift from stronger-than-expected U.S. jobless claims and retail sales data, which also boosted Wall Street. The U.S. economy is the biggest destination for Canadian exports.
The TSX had opened lower, tracking a global equities selloff over the past week based on worries that major central banks might start dialing back their monetary stimulus programs, and hit a seven-week low before recovering.
"The market has really been oversold over the past couple of weeks," said David Kunselman, senior funds manager at Excel Funds Management. "Right now it looks like you're getting a bounceback. People are seeing a little bit of opportunity."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the day up 167.24 points, or 1.38 percent, at 12,277.13. All 10 of the index's subgroups were firmer.
"If the Fed does start tapering, they're going to be doing it because of job growth and economic growth is much stronger," said Robert Kavcic, a senior economist at BMO Capital Markets. "That might spook equity investors in the near term but in the longer term it will actually be supportive."
The financials sector, the index's most heavily weighted, was up a market-leading 1.56 percent. In the group, Royal Bank of Canada rose 2.59 percent to C$60.56 and played the biggest role of any single stock in boosting the index. Continued...