Fed hopes propel TSX to best week in 7 months

Fri Jul 12, 2013 4:55pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index fell on Friday due to a drop in shares of gold and energy producers, but the U.S. Federal Reserve's support for monetary stimulus helped the index posted its biggest weekly gain in more than seven months.

The Toronto market eased after recording gains in the previous four sessions and hitting a one-month high earlier in the day. It still ended the week up 2.7 percent.

Investors also processed mixed U.S. earnings reports, as well as data showing U.S. consumer sentiment took a hit in early July and wholesale prices rose.

Federal Reserve Chairman Ben Bernanke said on Wednesday that the U.S. central bank must keep a stimulative monetary policy in place due to weak to inflation levels and a high unemployment rate.

That sparked a rally in global equity markets and caused a 1.5 percent jump in Toronto stocks on Thursday.

"What Bernanke is trying to do this time, by floating trial balloons and then backpedaling, is making sure this is an orderly process and not a big market crash," said Colin Cieszynski, senior market analyst at CMC Markets.

"He was saying, ‘Don't confuse us taking the foot off the gas pedal with putting the foot on the brake'," he added.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 31.08 points, or 0.25 percent, at 12,462.18.   Continued...

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