CANADA STOCKS-TSX hits 5-month high, boosted by Fed measures

Fri Sep 14, 2012 4:51pm EDT
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* TSX closes up 139.31 points, or 1.13 percent, at 12,499.47
    * Resource stocks again lead after Fed stimulus move
    * Seven of 10 sectors higher; defensive plays slip

    By Alastair Sharp
    TORONTO, Sept 14 (Reuters) - Canada's main stock index
gained more than 1 percent on Friday in a broad, resource-led
rally backed by higher commodity prices a day after the U.S.
Federal Reserve announced major stimulus measures.
    The TSX extended Thursday's 1 percent rally, with traders
inspired by the Fed's promise to pump $40 billion into the U.S.
economy every month, as long as inflation remains contained,
until the country's weak labor market turns around.
    Resource stocks were buoyed as investors returned to riskier
assets. Stronger commodity prices translated to a 2 percent gain
in energy stocks and a 2.6 percent rise in materials shares.
    "I'd like to hope this lasts for a while and provides some
measure of optimism for investors going forward, but it's going
to take a while for it to work through the system," said Rick
Hutcheon, president and chief operating officer at RKH
Investments, referring to both the Fed news and a similar move
from the European Central Bank earlier this month.
    The Toronto Stock Exchange's S&P/TSX composite index
 climbed 139.31 points, or 1.13 percent, to close at
12,499.47 on Friday. Seven of the 10 main sectors were higher.
    Earlier in the session, the index rose as high as 12,529.77,
the highest point since March 27, when it touched 12,603.71.
    The index notched a 1.9 percent gain for the week and has
moved more than 4 percent higher since early September, when
first the ECB and then the Fed lined up to announce big
bond-buying plans to support stumbling economies.
    "Whether or not that is enough in the short term to maintain
the enthusiasm or euphoria, personally I doubt it, but the
general direction has been established here," Hutcheon said.
    Suncor Energy was the most influential gainer on the
index, rising 3.4 percent to C$34.32. Oil and gas producer
Canadian Natural Resources was up 2.6 percent at
C$33.67, while miner Teck Resources rose 5 percent to
    U.S. crude prices finished the week up 2.7 percent on hopes
of stronger global demand for oil following the Fed's aggressive
move and as Middle East tensions escalated. 
    Copper prices jumped to 4-1/2-month highs as investors hoped
the stimulus measures would boost demand for industrial metals,
while gold prices touched a six-month high.  
    "The markets responded well yesterday and they're still
responding well today," said Pat McHugh, Canadian equity
strategist at Manulife Asset Management.
    Financial stocks, which make up nearly a third of the
index's weight, were up 1 percent, led by Manulife Financial
, which was 4.1 percent higher at C$12.64.
    Telecom, healthcare, consumer staple stocks ended in
negative territory.
    BCE Inc shares were off 1.9 percent at C$42.56,
while Valeant Pharmaceuticals International slipped 3.6
percent to C$54.77.
    "The traditionally defensive sectors, those were the ones
that had been doing well prior to the announcement ... people
are basically selling, taking profits in the few sectors that
have made money," McHugh said.
    "People have been feeling that there has been a sea change.
Whether that is in fact true remains to be seen ... from this
point forward, for the market to go up we're going to need
something on the earning side."