Resource shares push TSX to seven-week high

Fri Jul 19, 2013 5:30pm EDT
 
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By John Tilak

TORONTO (Reuters) - Canada's main stock index climbed to its highest level in more than 1-1/2 months on Friday, ending the week higher after a rise in commodity prices buoyed shares of natural resource companies and boosted market sentiment.

The Toronto index's weekly gain, 1.8 percent, was its fourth in a row. Over the last few days of the week investors cheered reassurances from Federal Reserve Chairman Ben Bernanke that the U.S. central bank's plans to scale back monetary stimulus will be flexible.

On Friday, the strength in resource shares helped the index do better than U.S. stocks, bucking the long-term trend of Canadian equities performing poorly compared with U.S. markets.

"The expectations have been extraordinarily low for Canadian stocks, but they are improving somewhat," said Bob Gorman, chief portfolio strategist at TD Wealth, which manages assets of $211 billion across North America.

"U.S. will outperform in general going forward, though we'll play a bit of a catch-up in the short to medium term."

Gorman, who expects the benchmark Canadian index to end the year at 13,200, expects steady growth in Toronto stocks and sees a modest rebound ahead for the index's energy and materials sectors.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 56.28 points, or 0.45 percent, at 12,685.13, after reaching 12,693.87, its highest level since May 31, earlier in the day.

As a result of the pounding resource stocks have taken due to low commodity prices, some investors are beginning to reassess their positions, Gorman said.   Continued...

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