TSX rises 1 percent after two-day slump

Wed Nov 2, 2011 6:03pm EDT
 
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By Jon Cook

TORONTO (Reuters) - The TSX rallied on Wednesday after two days of sharp declines, finishing up 1 percent as U.S. economic data and stronger commodity prices helped offset fears about the looming Greek referendum on the euro zone's bailout package.

Copper, oil, gold and base metals prices responded positively to a U.S. Federal Reserve statement that offered a moderately brighter economic outlook and appeared to leave open the door for further easing.

The market's positive performance was held in check, however, by lingering fears that a Greek confidence vote would result in the rejection of a 130 billion euro bailout package, which would have significant repercussions for the global economy.

"The risk of a disorderly Greek default has the capacity of putting major economies back in recession," said Fergal Smith, managing market strategist at Action Economics.

"U.S. data has been coming in better over the last while; there's a bullish thread supporting the market on the back of that," he added.

A report showing U.S. private-sector payrolls rose in October, helped support analysts' views that the world's No. 1 economy is maintaining its slow growth and is not sliding back into recession.

"I think the market is starting to form a viewpoint that maybe by things getting worse, perhaps that's the price we need to pay for things getting better in the intermediate term," said Paul Taylor, chief investment officer at BMO Harris Private Banking.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE gave back some of its early gains, finishing up 126.66 points, or 1 percent, at 12,241.76, after rising as high as 12,325.77.   Continued...