CANADA STOCKS-TSX rallies on China stimulus hopes

Tue May 29, 2012 11:24am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* TSX up 120.42 pts, or 1 pct, to 11,686.57
    * Energy, mining issues lead gains
    * China stimulus hopes boost commodities
    * Spain banking worries weigh on sentiment

    By Jon Cook	
    TORONTO, May 29 (Reuters) - Canada's main stock index rose
sharply on Tuesday as oil and mining firms were lifted by hopes
of further policy stimulus in China, helping markets shrug off
concerns over the deterioration of Spain's banking system.	
    Equities markets were boosted after Chinese media reported
that the government might pump as much as 2 trillion yuan
($315.28 billion) into the economy this year, although this
would be well below 4 trillion yuan ($635 billion) of stimulus
it did in the wake of the 2008-09 global financial crisis.
 	
    The news was a tonic for Canada's struggling materials and
energy sectors, which account for about 40 percent of the
weighting of the Toronto Stock Exchange's S&P/TSX composite
index.	
    Oil and gas firms led the way, up 2 percent, while
materials, which includes miners, rose 0.9 percent.	
    "The stock market in general is ridiculously cheap," said
Brendan Caldwell, chief executive of Caldwell Investment
Management Ltd. "The Canadian market has been underperforming
for a while, because the commodities sector has been hammered."	
    The most influential gainers included Teck Resources
, up 4.8 percent at C$32.82, First Quantum Minerals
, which rose 1.3 percent to C$18.31, Suncor Energy
, up 2.5 percent at C$29.63, Cenovus Energy,
which climbed 2.9 percent to C$33.33, and Canadian Natural
Resources, up 2 percent at C$32.40.	
    At 11 a.m. (1421 GMT), the TSX was up 120.42 points, or 1
percent, to 11,686.57, close to a three-week high.	
    Euro zone debt crisis fears increased after Spanish 10-year
borrowing costs neared the 7 percent danger level after the
government, struggling to sort out its finances, proposed
putting sovereign debt into the struggling lender.
 	
    Concerns that Spain's financial woes could deepen the euro
zone debt crisis led some investors to beef up their Treasuries
holdings, whose yields are hovering near historic lows.	
    "At some point the world has to move beyond Europe," said
Caldwell. "It's mentally written off Greece. It probably hasn't
written off Spain, Italy and Portugal yet."	
    However, good second-quarter earnings results from Bank of
Nova Scotia helped the Canadian financial sector
temporarily shake off euro zone debt fears, rising 0.8 percent
on Tuesday.	
    Scotiabank's shares jumped 2.2 percent to C$51.93 after
Canada's No. 3 bank said its second-quarter operating profit
rose as international banking and lending profits grew.
 	
    Canadian railway shares also helped boost gains, a day after
settling disruptive labor disputes. Canadian National Railway
 was up 2.9 percent to C$84.28 a day after the country's
largest railway operator said its 210 train dispatchers had
ratified a new collective bargaining agreement.	
    Canadian Pacific Railway jumped 1.4 percent to
C$76.56 after the Canadian government on Monday said it will
force CP's 4,800 striking workers back to work with fast-track
legislation aimed at restoring rail service by Thursday.