CANADA STOCKS-TSX hits 3-week high on stimulus hopes

Fri Jul 27, 2012 11:18am EDT
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* TSX up 89.74 pts, or 0.8 pct, at 11,729.49
    * Index at highest level since July 6
    * Financial, energy shares lead gains
    * Hopes of ECB, Fed stimulus moves boost markets
    * Progress Energy Resources up 12 pct on takeover bid

    By Jon Cook
    TORONTO, July 27 (Reuters) - Canada's main stock index
touched a three-week high on Friday, led by financial and energy
shares, as risk sentiment was boosted by fresh hopes that major
central banks in the U.S. and Europe will move to help the
struggling global economy.
    The markets received additional support as the leaders of
France and Germany said they are "determined to do everything to
protect the euro zone." The joint statement echoed comments one
day earlier by European Central Bank President Mario
    "The spotlight is now back on Europe," said Carlos Leitao,
chief economist at Laurentian Bank Securities. "I suspect the
ECB will come up with some concrete measures and stocks are
expecting that and pricing that in."
    Market expectations are high for another round of asset
purchases when the ECB and the U.S. Federal Reserve hold
separate meetings next week.
    "If that's the case it will be removing the really bad
outcome of a financial collapse," Leitao added.
    The news perked up Canada's financial services sector, which
rose 1.1 percent to lead the broader index higher. Gains were
led by the country's top lenders, with Royal Bank of Canada
 up 0.8 percent at C$51.27, Bank of Nova Scotia 
rising 1 percent to C$51.78 and Toronto-Dominion Bank up
0.8 percent at C$78.96.
    The heavyweight oil and gas group climbed 1.3 percent as
U.S. crude rose on hopes the Fed would respond with more
    Progress Energy Resources Corp led energy gains,
soaring more than 12 percent to C$22.63 after the Canadian
natural gas producer said Malaysia's state-owned oil company
Petronas has agreed to raise its offer to buy the
company by 8 percent. 
    Also supporting the sector's rise was Encana Corp,
up 2.9 percent at C$20.94, and ARC Resources Ltd, which
jumped more than 5 percent to C$25.61.
    TransCanada Corp shares edged up 0.7 percent to
C$45.13, after Canada's biggest pipeline company said on Friday
it received the final permit for its $2.3 billion Gulf Coast
pipeline project. The news came at the same time as TransCanada
reported a 23 percent fall in second-quarter profit on low
natural gas prices. 
    Around 11 a.m. EDT (1500 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was up 89.74 points, or 0.8
percent, at 11,729.49. The index was at its highest level since
hitting 11,750.83 on July 6.
    Markets largely shrugged off U.S. data on Friday that showed
America's economic growth slowed in the second quarter as
consumers spent at their most sluggish pace in a year. While the
figure was better than investors' worse fears it was still weak
enough to potentially push the Fed closer to pumping more money
into the economy. 
    "It's not good, but at least it's what was expected," said
Leitao. "There were some lingering bears that were expecting the
number would be weaker than that."