CANADA STOCKS-TSX hits 2-month high on ECB hopes, TMX shrs jump

Wed Jul 4, 2012 4:52pm EDT
 
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* TSX ends up 65.12 pts, or 0.55 pct, at 11,913.87
    * Hits highest level since May 4
    * Expectations of ECB rate cut boost financials
    * Trade subdued with U.S. closed for Independence Day
    * TMX Group up 3 pct after takeover bid approved

    By Jon Cook
    TORONTO, July 4 (Reuters) - Canada's main stock index hit a
two-month high on Wednesday, led by financial shares, which
gained on hopes major central banks will provide more monetary
stimulus to help counter the drag from the euro zone crisis.
    The rise followed the Toronto Stock Exchange S&P/TSX
composite index's biggest single-day gain this year on
Tuesday, when hopes for easing by central banks outside of
Canada also drove the rally.
    Nearly all of the Canadian market's 10 main sectors were
higher. The financial group led gains, rising 0.7 percent as
investors anticipated the European Central Bank will cut rates
and may also inject fresh funds to help boost the region's
struggling economy. 
    "We've seen better strength in the price of bank stocks and
that's a key indicator on Europe," said Arthur Salzer, chief
executive of Northland Wealth Management. "You're starting to
see that liquidity come back to the market and the risk trade
come on."
    Canada's major lenders were the main benefactors of the
central bank hopes, with Royal Bank of Canada climbing
1.2 percent to C$53.72, Bank of Nova Scotia rising 1
percent to C$53.84, and Bank of Montreal up 0.7 percent
at C$57.77.
    But Wednesday's volumes were light with U.S. markets closed
for the Independence Day holiday and investors cautious ahead of
policy decisions from the ECB and the Bank of England on
Thursday.    
    Weak euro zone data on Wednesday added to expectations of a
rate cut. Activity in Germany's services sector unexpectedly
stagnated in June, while business expectations in France slumped
to the lowest level in three years. 
    The TSX finished up 65.12 points, or 0.55 percent, at
11,913.87. The index at one point hit 11,936.16, its highest
level since May 4.
    The TSX rose for the sixth straight session, its longest
such streak in about a year.
    The heavily-weighted energy and materials groups also
gained, climbing 0.6 percent and 0.3 percent respectively. The
most influential gainers included Suncor Energy, up 1.4
percent to C$31.13, Talisman Energy, which rose 2
percent to C$12.21, Potash Corp, up 0.7 percent to
C$46.09, and Goldcorp Inc, up 1.1 percent to C$40.34.

    TMX RISES, TRICAN SHARES DRAG
    Shares of TMX Group rose more than 3 percent to hit
four-year high of C$48.50 after Ontario's securities regulator
and Canada's Competition Bureau approved the C$3.8 billion
($3.75 billion) takeover of Canada's biggest stock exchange
operator.
    The approvals of the bid made by a group of domestic
financial institutions brought what has been a protracted
process close to final approval. 
    On the downside, shares of Trican Well Service 
plunged more than 7 percent to C$11.35 after the company, which
performs hydraulic fracturing on oil and gas wells, warned that
wet spring weather and falling capital spending by its customers
would push it to a second-quarter loss. 
    Shares of fracking rival Calfrac Well Services Ltd 
also fell, dropping 5.1 percent to C$23. 
    "The service companies have been miserable investments for
the last five or six months," said John Stephenson, senior vice
president at First Asset Investment Management Inc. "The reality
is we're very challenged in the gas environment in North
America, but particularly in Canada."
    Magna International Inc shares jumped 6 percent to
C$42.43 as Canada's biggest auto parts supplier was boosted by
data showing stronger-than-expected U.S. June sales for most
major automakers. 
    "People still do have to turn in their cars every few
years," said Salzer, adding most consumers are holding onto
their autos longer than they were doing pre-recession. "Any type
of initial boost, faster than what it was for the last couple of
years, will definitely give that spike."