CANADA STOCKS-TSX hits six-week high as Fed reassures markets

Thu Jul 18, 2013 5:00pm EDT
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* TSX rises 60.08 points, or 0.48 percent, to 12,628.85
    * Five of the 10 main index sectors advance
    * RBC jump has biggest positive impact on index

    By John Tilak
    TORONTO, July 18 (Reuters) - Canada's main stock index rose
to its highest level in 1-1/2 months on Thursday as investors
took heart from Federal Reserve Chairman Ben Bernanke's comments
that the U.S. central bank will adopt a flexible approach in
dialing back its stimulus program.
    Strong earnings reports from major U.S. companies also
boosted sentiment as investors trained their sights on the
Canadian earnings season, which kicks into high gear next week.
    Led by gains in financial and energy stocks, the Toronto
market's Fed-inspired rally spilled over into a second session
as investors remained fixated on the Fed chairman's
congressional testimony. 
    Bernanke said on Wednesday that the Fed expects to start
scaling back its bond purchases later this year but left open
the option of changing that plan if the economic outlook shifts.
    "The markets have been reassured for now by comments from
Bernanke," said Youssef Zohny, portfolio manager at Stenner
Investment Partners, a unit of Richardson GMP.
    "(But) we definitely see increased volatility in the markets
over the next couple of months as investors become more
sensitive to economic data and try to factor in monetary
     The Toronto Stock Exchange's S&P/TSX composite index
 closed up 60.08 points, or 0.48 percent, at 12,628.85,
after rising as high as 12,680.23, its highest point since June
    "The Fed has reassured markets they're not going to take the
training wheels off the economy until it's more than ready,"
said Stan Wong, a portfolio manager at Macquarie Private Wealth.
"It's soothing the markets that the withdrawal of quantitative
easing is more data-dependent and not calendar-dependent."
    "The odds of a taper in September might have gone down a
little bit," he added. "It's not a set schedule. It's just going
to be based on where the economy goes from here."
    Five of the 10 main sectors on the index closed higher.
    Financials, the index's most heavily weighted sector, gained
1.3 percent. Royal Bank of Canada, the country's biggest
lender, jumped 1.5 percent to C$64.78 and had the biggest
positive influence on the index. Toronto-Dominion Bank 
was up 1.5 percent at C$87.48.
     Energy shares climbed 0.8 percent, reflecting gains in the
price of oil. In the group, Canadian Natural Resources Ltd
 added 1.7 percent to C$33.92, and EnCana Corp 
rose 1.3 percent to C$18.04.
    The materials sector, which includes mining stocks, was hurt
by declines in gold mining stocks, which had a volatile session.
Goldcorp Inc was down 1 percent at C$27.34.
    While Wong does not recommend investing in the gold sector
long term, he predicted another 5 percent jump in the price of
the precious metal.
    "You'll see an oversold bounce in gold," he said. "You're
also getting into a positive season for gold."
    Fed Chairman Bernanke also offered his thoughts on the
commodity. "Nobody really understands gold prices," he told a
Senate panel on Thursday. "And I don't pretend to understand
them either."