TORONTO (Reuters) - Canadian stocks climbed on Friday on optimism that European Union leaders were moving to address the region’s debt crisis by agreeing on measures aimed at enforcing stricter budget discipline among member nations.
Energy shares on the Toronto Stock Exchange rose 1.3 percent as oil prices jumped more than 1 percent. Canadian Natural Resources (CNQ.TO) was up 1.6 percent at C$37.66, while Cenovus Energy (CVE.TO) rose 2.3 percent to C$34.41. Suncor Energy (SU.TO) climbed 1.1 percent to C$29.85.
“There’s only one short answer to the market’s gyrations in recent weeks and recent months, and that is Europe. Sentiment is positive on developments out of Europe,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
The Toronto market’s S&P/TSX composite index .GSPTSE finished the day up 82.96 points, or 0.69 percent, at 12,034.75. Eight of its 10 main sectors were higher. The index was down 0.3 percent on the week.
Led by Germany and France, 26 of the 27 nations in the European Union agreed after a two-day summit to pursue tighter integration with stricter budget discipline in the euro zone. Britain said it could not accept the proposed EU treaty amendments.
“The thinking is a closer fiscal union will enable the stronger nations to paper over the deficiencies of the weaker nations so that might help the EU as a whole. But it’s just conjecture at this point,” Picardo said.
Markets around the world cautiously embraced the deal, and Picardo said that that optimism was reflected by the rise in cyclical or high beta groups, such as energy, financial and materials shares, on the TSX index.
Defensive groups such as telecoms and utilities, which tend to attract money when sentiment is weak, closed lower on the day.
The market was also cheered by news that China’s central bank plans to create a new vehicle to manage investment funds, worth a total of $300 billion, part of which will be focused on investments in Europe.
Reporting By Jennifer Kwan; Editing by Peter Galloway