TORONTO (Reuters) - Toronto’s commodity-heavy stock index hit its highest level in two months on Tuesday as healthy Chinese import data and a constructive outlook from U.S. aluminum giant Alcoa (AA.N) boosted confidence in resources and the global economy.
Base metal miners were among the most influential gainers, jumping 3.2 percent, as copper prices surged on stronger than expected Chinese imports, which brightened the demand outlook for industrial metals. <MET/L>
Prospects of easier monetary policies in China and a bullish demand forecast from Alcoa, the largest U.S. aluminum producer, also added to the upbeat tone, giving investors a respite from European debt concerns.
“The big news for next week couple weeks will be the focus on earnings, and especially if corporate earnings are not disastrous, so even if the outlook is positive, that might lead to renewed confidence among investors to get back into the market,” said Elvis Picardo, strategist and vice-president of research at Global Securities in Vancouver.
Renewed optimism about U.S. economic growth also underpinned gold, oil and other resource prices.<GOL/> <O/R>
Potash Corp (POT.TO) led the gains by material issues, rising more than 4 percent to C$44.36 on the bullish data from China, the world’s largest buyer of fertilizer.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 73.94 points, or 0.61 percent, at 12,270.66. It touched a high of 12,346.82, its best level since November 9, before easing.
Picardo said 12,500 still marks resistance for the TSX after that level capped the advance on two occasions between October and November.
Europe’s financial crisis took a back seat on Tuesday, but caution about upcoming debt auctions this week by Italy and Spain - currently the most worrisome euro zone sovereigns - still tempered the rally.
“The Europe story is getting a little long in the tooth. People are getting tired of it, so as long as that remains on the backburner I think we should be okay,” added Picardo.
Many analysts have predicted that developments out of China will come back into focus in 2012.
”China is not going away,“ said John Hughes, senior mining analyst at Desjardins Securities. ”We came into last year with everybody worried about a slowdown in China because rates were going up.
“Since the May period, the physical market showed nothing but a continual increase in terms of import levels.”
In individual company news, Nexen Inc NXY.TO bounced up 8 percent to C$18.40, a day after the oil and gas company announced it had replaced its chief executive and the head of its domestic operations [ID:nL1E8CA41B]
Lululemon Athletica LLL.TO surged 11.5 percent to C$60.95. The trendy yoga wear retailer announced it expected profit and sales in the current quarter to top earlier forecasts after holiday shoppers flocked to its stores.
Additional reporting by Jon Cook; editing by Rob Wilson