CANADA STOCKS-TSX near 2-month high on global stimulus hopes

Tue Jul 3, 2012 11:56am EDT
 
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* TSX up 251.14 pts, or 2.2 pct, at 11,847.70
    * Hits highest level since May 7
    * Energy, mining shares lead gains
    * Investors anticipate ECB rate cut, more Fed easing

    By Jon Cook
    TORONTO, July 3 (Reuters) - Canada's main stock index hit
its highest level in nearly two months on Tuesday, led by a
rally in mining and energy shares, as hopes of further monetary
easing by central banks helped allay worries about the impact of
the euro zone crisis.
    Raising expectations of more stimulus was a series of
troubling economic reports on Monday from the United States, the
euro zone and China. U.S. manufacturing shrank in June,
according to the Institute for Supply Management. 
     "That ISM number yesterday was quite a disappointment,"
said Philip Petursson, director of the portfolio advisory group
at Manulife Asset Management. "Investors are expecting more
stimulus out of the global central banks, including the Fed and
Chinese officials, which would be positive for commodities."
    Weakness in the euro zone economy prompted anticipation of
an interest rate cut by the European Central Bank this week.
    Expectations also rose for an imminent cut in the amount of
money banks in China are required to hold as reserves after a
state-backed paper urged the move in a front-page editorial.
 
    At 11:21 a.m. (1521 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was up 251.14 points, or 2.2
percent, at 11,847.70. It touched 11,878.16, its highest level
since May 7.
    Gains were led by the heavyweight materials and energy
sectors, which both rose more than 3 percent. Copper hit a
six-week high, gold rallied and oil topped $101 a barrel for the
first time in three weeks on Tuesday as investors bet on
improving economic growth.   
    The most influential gainers included Suncor Energy,
up 4.3 percent at C$30.71, Cenovus Energy Inc, which
rose 5.6 percent to C$34.18, Potash Corp, up 2.5 at
C$45.63, Barrick Gold, up 2.6 at C$39.34, and Teck
Resources, which climbed 5 percent to C$33.09.
    Positive North American factory data on Tuesday underpinned
the improved sentiment. New orders for U.S. factory goods rose
more than expected in May and Canadian manufacturing activity
climbed in June to its highest level since
September.  
    Canada's resource-heavy index extended its gains from last
week, as markets rallied on Friday after euro zone leaders
agreed on measures to cut soaring borrowing costs in Italy and
Spain and recapitalize banks.
    On Tuesday, the financial subindex rose 1.4 percent, led by
Canada's top banks. Royal Bank of Canada climbed nearly
2 percent to C$53.16, Toronto-Dominion Bank was up 1.4
percent at C$80.10, and Bank of Nova Scotia gained 1.2
percent to C$53.35.
    However, analysts remained cautious, adding Europe still has
not achieved anything concrete to assuage investor fears.
    "This is perhaps the market grasping at straws," said
Petursson. "You have an idea that was put forth last week, but
implementation of that idea is still in question."
    On the negative side, Research In Motion continued
its slide, falling 0.8 percent to C$7.48 as Chief Executive
Thorsten Heins said on Tuesday there is nothing wrong with the
company as it exists now, denying the maker of BlackBerry
smartphones is in a "death spiral."