CANADA STOCKS-TSX extends rally on resource stocks

Thu Jul 19, 2012 6:00pm EDT
 
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* TSX ends up 86.55 pts, or 0.75 pct, at 11,665.70
    * Energy, mining shares lead gains
    * U.S. data, euro zone worries weigh
    * First Quantum jumps 10 pct

    By Jon Cook
    TORONTO, July 19 (Reuters) - Canada's main stock index
advanced for the fifth straight session on Thursday, led by
energy and mining shares, but gains were limited as weak U.S.
data and a spike in Spa in' s bo rrowing costs stoked concerns
about the global economy.
    European equities hit four-month highs and the benchmark S&P
500 index rallied to a fresh 2-1/2-month peak, as commodities
rallied and investor sentiment was buoyed by solid corporate
earnings.  
    Seven of Canada's 10 main industry sectors finished higher.
The heavily-weighted energy complex led the way, rising 1.6
percent as oil prices hit eight-week highs on escalating tension
in the Middle East. 
    The oil and gas patch's top performers included Suncor
Energy, which rose 1.3 percent to C$30.59, Canadian
Natural Resources, up 3.2 percent at C$28.98, and
Canadian Oil Sands Ltd, which jumped 3.4 percent to
C$20.32.
    "We're seeing a lot of the oil and gas service stocks, both
in Canada and the United States moving up significantly," said
Robert McWhirter, president and portfolio manager at Selective
Asset Management Inc.
    Trican Well Service Ltd also jumped nearly 9
percent to C$11.54.
    Nexen Inc's shares shrugged off disappointing
second-quarter earnings on Thursday to finish nearly flat at
C$17.44. Profit at Canada's No. 6 independent oil explorer fell
a steeper-than-expected 57 percent in the quarter, though it
said much of the drop was due to a charge for a previously
announced unsuccessful exploration well in the Gulf of Mexico.
 
    The influential materials subindex rose 1.2 percent as gold
and copper prices gained from a weaker U.S. dollar, which makes
assets priced in greenbacks cheaper for holders of other
currencies.   
    Mining gains were led by First Quantum Minerals,
whose stock surged more than 10 percent to C$18.28. Canada's
second-largest copper miner rose as prices for the red metal hit
a two-week high on expectations that China could announce
further monetary easing. 
    Canada's top gold producers were also firmer, with Goldcorp
 rising 2.2 percent to C$33.60, and Barrick Gold 
advanced 1.2 percent to C$35.08.
    "The golds and metals were very oversold, so we're getting a
bounce," said John Ing, president of Maison Placements Canada.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 86.55 points, or 0.75 percent, at 11,665.70.
At its peak, it touched 11,674.37 points -- its highest level
since July 10.
    Canadian stocks also took their lead from U.S. markets,
where the benchmark S&P 500 index reached its highest level
since early May. 
    The recent rise in U.S. stocks has largely been driven by
better-than-expected corporate earnings, with the latest
positive signal coming from technology giant IBM, which
raised its full-year profit forecast late on Wednesday.
 
    The recent upswing in North American markets may signal the
worst is over and that equities are poised to bounce higher,
said McWhirter.
    "On a relative basis earnings on stocks appear to be very
attractive versus U.S. 10-year bonds," he added.
    The positive sentiment was tempered, however, by
weaker-than-expected readings on U.S. manufacturing, housing and
labor markets. Adding to investor concern was a spike in Spain's
borrowing costs, which intensified fears Madrid may eventually
need a full-blown sovereign bailout. 
    In Canadian earnings news, Shoppers Drug Mart Corp's 
shares rose 1 percent to C$43.07 after Canada's largest pharmacy
chain said on Thursday quarterly earnings edged higher after
excluding a charge for store closures.