TORONTO (Reuters) - Toronto’s main stock index extended gains on Wednesday afternoon after hitting a five-month high in the previous session, as gold mining issues were boosted by higher bullion prices and strong U.S. housing data.
Gold shares surged nearly 2 percent after bullion hit a three-month high on Wednesday as technical buying helped the precious metal reverse initial losses. <GOL/>
“We are seeing all the funds step in. It (technical buying) is the only thing at the moment that we can pin it on,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
Gold’s upswing boosted the index’s heavyweight materials sector by 1.7 percent. Barrick Gold (ABX.TO), the world’s top producer, jumped 2 percent to C$49.32 while Goldcorp (G.TO) rose 2.4 percent to C$49.30.
At 2:55 p.m. (1955 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 73.98 points, or 0.6 percent, at 12,697.34, its highest level since September 7, 2011.
The market mood was also lifted as U.S. home resales surged in January to a 1-1/2 year high, while the supply of properties on the market was the lowest in almost seven years, pointing to a nascent housing recovery in Canada’s top trading partner.
“The prospects of the U.S. are beginning to get a little brighter,” said Rick Hutcheon, president and chief operating officer at RKH Investments.
“There are signs that there may be some improvement in the nearer term and that’s what the market has been waiting for.”
Oil and gas issues were up 0.6 as Brent crude oil reached a nine-month high on Wednesday, supported by Iran-related supply worries. <O/R> Suncor Energy (SU.TO) was the biggest heavyweight gainer, rising 2 percent to C$35.43.
The gradually brightening U.S. economy has helped the TSX rally more than 5 percent this year despite continued unease about conditions in Europe.
“It’s a North American phenomenon,” Hutcheon said. “We’ve become a little more inward looking and a lot of that has been forced on us by the grief that’s going on in Europe.”
Potash Corp (POT.TO), the world’s top fertilizer producer, rose 1.1 percent to C$47.38 on hopes for increased U.S. demand.
Optimism about Tuesday’s approval by European officials of another multibillion-dollar bailout for Greece waned on Wednesday as data showed the euro zone may be sliding back toward recession.
Preliminary data also showed China’s new export orders shrank in February in a worrying sign that the euro area debt crisis is afflicting the Asian powerhouse.
Financial shares fell 0.2 percent. Bank of Nova Scotia (BNS.TO) led the retreat, sliding 0.8 percent to C$53.75.
In individual company news, Rogers Communications (RCIb.TO) rose 1.1 percent to C$38.18 after it reported a stronger than expected quarterly profit and raised its dividend.
Editing by Peter Galloway and Rob Wilson