Fed hopes buoy TSX as bank, energy shares climb
By John Tilak
TORONTO (Reuters) - Canada's main stock index jumped on Monday as hopes that this week's Federal Reserve meeting would reaffirm support for the U.S. central bank's easy monetary policy spurred sharp gains in shares of financial and energy companies.
The rise helped the market recover from its 1.5 percent loss last week, but the index remained in negative territory for the year.
As with global equity markets, Toronto stocks have been hit in recent weeks by fears the Fed will soon start scaling down its quantitative easing program, under which it buys $85 billion a month in bonds.
But markets on Monday turned optimistic that the Fed, at its two-day meeting that ends Wednesday, will reaffirm its commitment to supporting U.S. economic recovery
"Expectations continue to wax and wane with regard to the Fed's intentions," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
"The last thing the Fed wants to do is to roil the markets. The Fed is aware that investors are hanging onto its every word," he added. "If anything, I expect Bernanke to soothe the market's fears."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 101.54 points, or 0.83 percent, at 12,288.90.
"People are feeling better. A little bit of confidence is slowly back up in our market," said Fred Ketchen, director of equity trading at ScotiaMcLeod. "We might have overdone it on the downside, and it's time to equal that now and show some response to modest economic growth." Continued...