CANADA STOCKS-TSX rallies on oil; Bernanke cools stimulus hopes

Tue Jul 17, 2012 5:09pm EDT
 
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* TSX ends up 50.01 points, or 0.4 pct, at 11,571.19
    * Energy shares boosted by higher oil prices
    * Bernanke remains coy on stimulus

    By Jon Cook
    TORONTO, July 17 (Reuters) - Canada's main stock index hit a
one-week high o n T uesday, rising with energy shares on fresh
tensions in the Middle East, but gains were limited after
Federal Reserve Chairman Ben Bernanke dampened expectations of
further monetary stimulus.
    Financial markets had hoped for signs the Fed was moving
closer to a third round of bond purchases, also known as
quantitative easing, or QE3. Bernanke repeated the Fed's pledge
to act if needed, even while offering no new clues on when or
how the central bank might offer extra support to the U.S.
economy. 
    Still, the market remained hopeful of future Fed action.
    "I would not be surprised to see further stimulus and easing
in the next couple months out of the U.S. and that's what the
market is telling us today," said Barry Schwartz, vice president
and portfolio manager at Baskin Financial Services.
    "If there's stimulus and easing, you want to own
commodities."
    Canada's resource-heavy index fell after Bernanke's comments
in his semiannual testimony to Congress, but rebounded as U.S.
crude bounced back amid rising tensions involving the West's
dispute with Iran over Tehran's nuclear program. 
    "(U.S.) oil at $85 to $95 (a barrel) is Goldilocks - it's
too good to be true," said Schwartz. "It's a nice price for the
economy where you don't have worries about gasoline prices
getting too high or inflation, and it's a good price for the oil
producers to make a lot of money."
    Canada's influential oil and gas patch led the broader
index's gains, climbing 1.3 percent. Canadian Natural Resources
 jumped 3.2 percent at C$27.31, Encana Corp 
also rose 3 percent to C$20.63, and Suncor Energy was up
0.9 at C$29.99.
    On the downside, Bonterra Energy slumped 2.6
percent to C$42.93 and Baytex Energy dipped 0.3 percent
to C$42.05 after a price downgrade by the Canadian Imperial Bank
of Commerce. 
    The Toronto Stock Exchange's S&P/TSX composite index
 finished up 50.01 points, or 0.4 percent, at
11,571.19. At one point it touched 11,572.21, its highest level
since July 10.    
    The powerhouse materials sector, which includes miners, led
the declines, slipping 0.4 percent as gold prices retreated
after Bernanke's remarks.  
    Losses were led by gold miners Barrick Gold, down
0.8 percent to C$35.08, Kinross Gold, off 3.8 percent at
C$8.13, and Eldorado Gold, which sagged 3.2 percent to
C$10.49.
    AuRico Gold plunged more than 13 percent to C$6.66
a day after the company cut its production forecast. The gold
miner also announced on Tu esday that its chief executive, René
Marion, has resigned for health reasons.
  
    Shares of First Quantum Minerals Ltd fell 1.9
percent to C$16.64 after it said it has suspended operations at
its Guelb Moghrein copper mine in the North African country of
Mauritania due to a strike by some of its unionized workers.
 
    "It looks like the oils and materials stocks are bottoming,"
said Paul Hand, managing director at RBC Capital Markets.
    In other company news, Héroux-Devtek Inc shares
soared 32.7 percent to C$10.42 after it sold its aerostructure
and industrial products business to Precision Castparts Corp
 for about $295 million as it looks to focus on its
landing gear business.