TSX set to rise as euro zone cloud lifts: Reuters poll

Thu Dec 1, 2011 11:40am EST
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By Jon Cook

TORONTO (Reuters) - Canadian stocks will rise in 2012 as policymakers iron out the euro zone's sovereign debt crisis and improving economic data in Canada and the United States soothe investor concerns about global growth, a Reuters poll found.

Firmer Canadian and U.S. fundamentals will help send the commodity-linked Toronto Stock Exchange's S&P/TSX composite index .GSPTSE to 12,225 by mid-2012, and to 12,500 by year's end, according to median forecasts from 26 analysts polled over the past week.

The index closed up 4.0 percent at 12,204 on Wednesday, and the forecasts were 0.2 percent and 2.4 percent, respectively, above that.

Global indexes rallied on Wednesday after central banks around the world announced co-ordinated steps to prevent a credit crunch among banks in Europe struggling with the region's debt crisis.

"Europe will continue to make the moves needed to keep things stable. We do not think the euro zone will break up. Or if it does it will be orderly," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"As a result, energy stocks will better reflect oil prices and we will see a rebound in financials, which have clearly been negatively affected by worries about the global financial situation."

The Canadian stock index is trading at a 12-month forward multiple of 11.44 times, compared with its 10-year average of 14.34 according to Thomson Reuters I/B/E/S data.

The index's key pillars of energy, financials and materials stocks have slumped this year by around 19 percent, 13 percent and 16 percent, respectively. Warne said those sectors were expected to lead the rebound.   Continued...