CORRECTED-Gold gains help TSX shrug off U.S., Europe worries

Thu May 17, 2012 11:50am EDT
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* TSX up 56.95 pts, or 0.5 pct, to 11,383.03
    * Gold miners lead gains; financials fall
    * Weak U.S. data boosts hopes of further Fed stimulus
    * Greek, Spain bank woes weigh on market

    By Jon Cook	
    TORONTO, May 17 (Reuters) - Toronto's main stock index
rebounded on Thursday a day after hitting a 2012 low, as gains
from gold miners offset soft U.S. economic data and mounting
worries about turmoil in Greece and Europe's fragile banking
    Canada's sub-index of gold mining firms jumped 6 percent as
gold prices firmed after sinking to a 4-1/2-month low on
Wednesday, lifting the broader index into positive territory.
    Top gold producers Barrick Gold and Goldcorp 
led the group's gains. Barrick was up more than 6 percent at
C$37.91 and Goldcorp rose nearly 8 percent to C$35.75. Smaller
miners were also up, with Eldorado Gold rising 7.6
percent to C$11.20 and Yamana Gold climbed 6.5 percent
to C$14.05.  	
    Gold was also boosted by Wednesday's release of the U.S.
Federal Reserve's minutes from its most recent meeting in which
policymakers kept alive the possibility of a fresh round of
monetary stimulus for the moderately expanding U.S. economy.
    "Gold has benefited from pressure on the Fed to engage in QE
3," said Fergal Smith, managing market strategist at Action
    Weak U.S. data on Thursday supported the case for further
monetary easing. The Philadelphia Federal Reserve Bank said its
index gauging factory activity in the U.S. Mid-Atlantic region
unexpectedly dropped to a reading of minus 5.8 in May,
indicating contraction and the lowest level since last
September. Meanwhile, new U.S. jobless claims were flat at
370,000, slightly disappointing market expectations.
    "The slump in the Philly Fed is consistent with the view
that the U.S. economic backdrop is also weakening," said Smith.	
    At 11:22 a.m. (1522 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was up 56.95 points, or 0.5
percent, to 11,383.03. On Wednesday the index hit a seven-month
low at 11,298.46.	
    Smith saw Thursday's boost being short-lived and expected
the TSX would eventually test last year's low of 10,848.19,
reached on Oct. 4, before staging a larger rally.	
    "The market will see increased support as that trough comes
into view."	
    Thursday's gains were muted by jitters over political
turmoil in Athens, where politicians rejecting harsh austerity
measures are likely to win June 17 elections. Wednesday's move
by the European Central Bank to stop providing liquidity to some
Greek banks, which are severely under-capitalized, added to the
    "What's dominating the markets is fear of an uncontrolled
Greek exit from the euro," said Smith. "Compounding matters is
Spanish bank stress."	
    Spain's borrowing costs shot up at a bond auction on
Thursday after economic data confirmed the country is back in
recession and reports that nationalized Bankia had suffered an
outflow of deposits hammered its share price. 	
    Canadian financial issues, which could be vulnerable if
Greece were to suffer a disorderly default, were down nearly 1
percent. Royal Bank of Canada shed 1.4 percent to
C$52.28 and Toronto-Dominion Bank fell 1 percent to
    In other news, shares of Canadian Pacific Railway Ltd
 rose 1.2 percent to C$76.70 after Chief Executive Fred
Green resigned following a bitter proxy battle with New York
activist shareholder William Ackman on Thursday, clearing the
way for a management overhaul at the country's second-biggest