CANADA STOCKS-TSX extends rally on financial, energy gains

Wed Jul 18, 2012 1:45pm EDT
 
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* TSX up 26.70 pts, or 0.2 pct, at 11,597.89
    * Energy shares rise on higher U.S. oil
    * Financials gain on solid BofA earnings
    * Dampened Fed stimulus hopes weigh on gold miners

    By Jon Cook
    TORONTO, July 18 (Reuters) - Canadian stocks were headed for
their fourth straight session of gains on Wednesday as financial
and energy shares rose on higher oil prices and solid U.S.
earnings, but worries about the euro zone economy limited gains.
    Canadian financials led the broader index higher, rising 0.4
percent. The influential sector continued to garner support from
better-than-expected earnings from U.S. banks.
    On Wednesday, Bank of America Corp, the second-largest U.S.
bank, posted second-quarter earnings of $2.5 billion, reversing
a year-earlier loss. 
    "At the end of the day the numbers have been better than
expectations and that has improved the sentiment toward the
financials," said Bob Gorman, chief portfolio strategist at TD
Waterhouse.
    JPMorgan Chase & Co, Wells Fargo & Co,
Citigroup Inc and Goldman Sachs Group Inc in recent
days all beat analysts' earnings estimates.
    Also on Wednesday, U.S. bellwethers Intel and
Honeywell reported profits, defying the downward trend
of U.S. economic growth. 
    In Canada, financial gains were led by Toronto-Dominion Bank
, up 0.7 percent to C$80.48, Bank of Nova Scotia
, which edged up 0.8 percent to C$52.46, and Bank of
Montreal, rose 0.6 percent to C$57.92. 
    The oil and gas patch also rose 0.3 percent as U.S. crude
was heading for its highest close since May 29, after bloodshed
in Syria highlighted worries about supply from the Middle East.
 
    The most influential gainers included: Canadian Natural
Resources, up 2.5 percent at C$28, Suncor Energy
, which rose 0.8 percent to C$30.23, and TransCanada Corp
, up 0.6 percent at C$44.05.
    At 1:15 p.m. EDT (1715 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was up 26.70 points, or 0.2
percent, at 11,597.89. At one point the index touched 11,615.38,
its highest level since July 10.
    Gains were limited by losses from the heavily-weighted
materials sector, which slid 0.1 percent as gold fell on
dampened speculation that the cooling U.S. economy would
imminently require more stimulus. 
    Declines were led by top gold miners Goldcorp Inc,
which fell 3.2 percent to C$33.01, Barrick Gold, off
0.7 percent at C$34.82, and Yamana Gold, down 2.5
percent to C$14.59.
    Also weighing was Cogeco Cable Inc, whose shares
plunged more than 15 percent to C$37.72 after the company said
on Wednesday it will pay $1.36 billion to buy U.S. cable
operator Atlantic Broadband. 
    Worries about Europe's debt crisis were also reignited
following comments by German Chancellor Angela Merkel. The
German leader was quoted in a media report as saying, "We have
not yet shaped the European project so that we can be sure that
everything will turn out well, we still have work to do."
    Markets were already in a nervous mood after U.S. Federal
Reserve Chairman Ben Bernanke said on Tuesday that the U.S.
economic recovery was being held back by anxiety over Europe's
debt crisis.
    However on Wednesday, before a House Financial Services
Committee, Bernanke moderated his tone, saying the world's top
economy would experience "continued moderate growth."
 
    Bernanke's remarks were backed up by fresh data that showed
U.S. housing starts rose 6.9 percent last month to a seasonally
adjusted annual rate of 760,000 units, the highest rate since
October 2008. 
    "You're not seeing further deterioration," said Gorman. "The
worst fears are not being realized."