TSX hits three-week high as resources bounce back
By John Tilak
TORONTO (Reuters) - Canada's main stock index rebounded to hit a three-week high on Thursday as rising commodity prices boosted shares of energy and materials companies and offset uncertainty over how soon the U.S. Federal Reserve will scale back its stimulus measures.
An advance in the telecommunications sector also provided support for the market after a report that U.S. giant Verizon Communications Inc (VZ.N: Quote) might delay its entry to Canada. The news lifted the shares of Canada's three dominant wireless players: Rogers Communications Inc (RCIb.TO: Quote), Telus Corp (T.TO: Quote) and BCE Inc (BCE.TO: Quote).
The price of bullion surged more than 2 percent, spurring a jump in shares of gold miners. And increasing tensions in the Middle East drove the price of oil to a four-month high.
The Toronto index, whose gains on Thursday contrasted with a sharp fall in U.S. stocks, has managed to outperform the S&P 500 .SPX in August to date, despite trailing its U.S. counterpart all year.
"There's a section of the market that's jumping into the resource stocks with a belief that perhaps the worst is over," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
"I can't remember the last day when you had a daily divergence of this extent," Picardo said of the differing fortunes of the U.S. and Canadian indexes. "Perhaps the thesis that the TSX will outperform U.S. stocks in the second half of the year is off to a good start."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 65.22 points, or 0.52 percent, at 12,704.52, its highest level since July 25.
U.S. stock markets fell as investors interpreted positive U.S. economic data as a sign that the wind-down of the Fed's stimulus program is imminent. Figures showed that the number of Americans filing new claims for jobless benefits fell to near a six-year low last week and consumer prices rose broadly in July. Continued...