Yellen comments pull TSX to two-week high

Tue Feb 11, 2014 5:18pm EST
 
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By John Tilak

TORONTO (Reuters) - Canada's main stock index hit a two-week high on Tuesday after U.S. Federal Reserve Chair Janet Yellen calmed the markets with an assurance that the central bank's move to wind down its stimulus program is on track, signaling Fed confidence that the U.S. economy is growing.

Those comments, Yellen's first public remarks in her new post, helped drive gains in every major sector of the index and sent gold-mining shares to a five-month high.

Investors also cheered an attempt by Republicans in the House of Representatives to push forward legislation that extends U.S. borrowing authority for a year with no strings attached.

Yellen noted that the U.S. labor market recovery was "far from complete" and said there was a need to keep an eye on a broad range of labor market indicators, but in comments that were soothing to markets she stressed continuity with the policies of her predecessor, Ben Bernanke.

The benchmark Canadian index was up for a sixth straight session, and appeared to be showing signs of stabilizing after a volatile phase triggered by turmoil in emerging markets.

"Based on the market reaction, it sounds like (Yellen) has done a very good job of striking the right tone… and in terms of easing off the tapering but not pulling back so quickly that it creates market panic," said Atul Tiwari, managing director of Vanguard Investments Canada, a unit of Vanguard Group, which manages $2.6 trillion in global assets.

But he added a cautious note. "We're seeing a lot of volatility. In the near to medium term, our view on the global equity market has become more guarded," he said. "We encourage investors to be cautious about increasing their equity risk in the current environment."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 86.81 points, or 0.63 percent, at 13,880.99.   Continued...

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