CANADA STOCKS-TSX hits 5-wk high on Fed, Greece hopes

Tue Jun 19, 2012 11:23am EDT
 
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* TSX up 130.48 pts, or 1.1 pct, at 11,731.61
    * Energy, financials lead gains
    * Markets upbeat ahead of U.S. Fed meeting

    By Jon Cook
    TORONTO, June 19 (Reuters) - Canada's main stock index
rallied to a five-week high on Tuesday, led by the energy and
financials groups, as rising Spanish bond yields heightened
expectations of further central bank stimulus moves and as
markets were more hopeful about Greece remaining in the euro
zone.
    All of Canada's 10 main subgroups were higher, with the oil
and gas sector leading the way, rising 1.6 percent. The
financial group climbed 1.4 percent.
    "Today we're finally seeing a full-scale rally on the TSX,"
said Barry Schwartz, portfolio manager at Baskin Financial
Services. "There has kind of been a delayed response to the news
from the weekend."
    In Greece, political leaders raced to build a coalition
government led by conservative New Democracy leader Antonis
Samaras that would seek to renegotiate the terms of Greece's 130
billion euro ($163.53 billion) bailout agreement.
 
    The most influential gainers included Suncor Energy,
up 2.2 percent at C$29.89, Cenovus Energy, which
climbed 4.3 percent to C$33.64, Royal Bank of Canada, up
1.7 percent to C$51.75, and Toronto-Dominion Bank, which
rose 1.3 percent at C$79.60.
    At 11:03 (1503 GMT), the Toronto Stock Exchange's S&P/TSX
composite index was up 130.48 points, or 1.1 percent,
at 11,731.61. It climbed as high as 11,737.93, its highest level
since May 11.
    Recent data has suggested the U.S. economy is losing steam,
putting pressure on the Fed to embark on more monetary easing,
or to extend its "Operation Twist" program which expires at the
end of the month.
    Muddying the picture for investors was U.S. housing data on
Tuesday that suggested a nascent housing recovery remains on
track. Groundbreaking on new homes dropped in May, but stayed
above 700,000 for the fifth straight month, a first since 2008.
New building permits jumped 7.9 percent in May. 
    Despite the allure of more stimulus, Canadian gold stocks
fell 1 percent on Tuesday. Losses were led by top gold producers
Barrick Gold, down 1.2 percent at C$40.68, and Goldcorp
Inc, which slid 1.4 percent to C$40.10.
    Gains in riskier asset markets were limited by concerns over
a sharp rise in Spain's short-term borrowing costs and a big
fall in German investor confidence. 
    Spain's short-term borrowing costs rose to their highest
level since 1997 in a debt sale on Tuesday as investors worried
the country will soon be forced to ask for international aid.
 
    "I certainly wouldn't want to lend these guys any money,"
said Schwartz. "We're all going to suffer if Europe enters into
a worse recession and no-one wants to see that."
    Those worries were compounded by a survey released on
Tuesday that showed German analyst and investor sentiment
dropped in June at its fastest rate since October 1998,
indicating the euro zone's strongest economy may be vulnerable
to the effects of the region's debt crisis.