TSX advances after Bank of Canada cuts rates
TORONTO (Reuters) - Canada's main stock index rose on Wednesday after the Bank of Canada cut interest rates to try to stimulate a sputtering economy, helping lift the shares of financial companies.
The benchmark Canadian index ended up for a fourth straight session, benefiting this week from a bailout deal reached by Greece and its creditors.
The Bank of Canada cut its key interest rate by a quarter percentage point to 0.5 percent, saying an unexpected economic contraction in the first half of the year had added to excess capacity and put downward pressure on inflation.
Meanwhile, U.S. Federal Reserve Chair Janet Yellen repeated her view that the Fed will likely hike interest rates later this year if the U.S. economy expands as expected.
Following the Bank of Canada news, TD Canada Trust cut its prime lending rate by 10 basis points to 2.75 percent, effective July 16.
"It's basically a positive for the banks. That potentially should improve their spreads," said David Cockfield, managing director and portfolio manager at Northland Wealth Management.
"You can't fault the (central) bank for it, given the numbers are coming in as they are," he added.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 62.88 points, or 0.43 percent, at 14,662.28. Eight of the 10 main sectors on the index were higher.
Financials, the index's most heavily weighted sector, gained 0.7 percent. Toronto-Dominion Bank TD.TO advanced 1.1 percent to C$52.71, and insurer Manulife Financial Corp (MFC.TO: Quote) climbed 1 percent to C$23.54. Continued...