TSX notches fifth straight gain as banks bounce

Thu Jul 16, 2015 4:53pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index gained on Thursday, with banking stocks leading the way a day after the central bank cut interest rates, while gold miners fell as renewed anticipation of a U.S. Federal Reserve rate hike this year hit bullion prices.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the day up 68.80 points, or 0.47 percent, at 14,731.08. Seven of its 10 main sectors gained.

The financial sector, which accounts for 35 percent of the index's weight, gained 0.8 percent, with Toronto-Dominion Bank (TD.TO: Quote) up 1.1 percent to C$53.30 and Bank of Nova Scotia (BNS.TO: Quote) gaining 1.3 percent to C$64.93.

"The banks are doing well, probably because of lower rates and because their earnings from their U.S. and overseas operations should boost their earnings when they're translated back into Canadian dollars," said Brendan Caldwell, chief executive of Caldwell Investment Management.

The rate cut could ultimately spark more economic activity across sectors, which also helps financials.

"Lower rates encourage people to invest, encourage businesses to make acquisitions, take on debt, expand their operations," said Barry Schwartz, a portfolio manager at Baskin Financial Services.

"The banks will benefit from more M&A, more stock listings, more bond and preferred share offerings, wealth management and ancillary services and loan demand," he added.

The index's biggest weights included First Quantum Minerals Ltd (FM.TO: Quote), which slumped 6.1 percent to C$14.67, and Barrick Gold Corp (ABX.TO: Quote), which gave up 3.9 percent to C$11.98. The overall materials group retreated 0.6 percent, while energy was off 0.4 percent.   Continued...

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014.  REUTERS/Mark Blinch