CANADA STOCKS-ECB hopes push Toronto stocks to one-month peak

Tue Aug 7, 2012 2:01pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* TSX up 182.38 points, or 1.6 pct, at 11,844.97
    * Index hits highest level since July 5
    * Mining, energy shares lead gains
    * Sentiment boosted by hopes of further ECB action

    By Jon Cook
    TORONTO, Aug 7 (Reuters) - Canada's main stock index hit a
one-month high on Tuesday, led by energy and mining shares,
buoyed by stronger crude and commodity prices and encouraged by
a likely European Central Bank move to combat the region's
sovereign debt crisis.
    Toronto stocks followed global markets, which have enjoyed a
strong run so far this week on investor expectations the ECB
will buy bonds to ease the pressure on Spain and Italy, albeit
under strict conditions that have yet to be fully worked out.
 
    "Part of this rally is predicated on central banks doing the
right thing," said Elvis Picardo, vice president of research at
Global Securities in Vancouver. "Whether that comes to pass is
extremely difficult to say."
    The sharp rise added momentum to a rally that began on
Friday after positive U.S. payroll data fueled a broad
commodities rally. Canadian exchanges were closed on Monday for
a public holiday.
    Picardo said the next test would likely come with the
release of Canadian jobs data on Friday. "It could really could
go either way. If the numbers are really bad, perhaps we could
see the local rally stall a little bit."
    At around 1:25 p.m. (1725 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was up 182.38 points, or 1.6
percent, at 11,844.97. At one point the index touched 11,855.10,
its highest level since July 5. 
    All of Canada's 10 main sectors were higher. The
heavily-weighted energy group led gains, climbing as oil prices
rallied on supply worries. 
    The biggest gainers included Canadian Natural Resources  
, which rose 6.4 percent to C$29.75, Suncor Energy
, which gained 1.9 percent to C$32.21 and Cenovus Energy
, which jumped 4.4 percent to C$32.76.
    The influential materials group, which includes miners,
jumped 2.6 percent as metal prices climbed. 
    Leading the way were top gold producers Barrick Gold
, up 3.1 percent at C$33.85, and Goldcorp Inc,
which climbed 2.1 percent to C$36.84.
    First Quantum Minerals rose 3.8 percent to C$19.70
on news the Canadian miner has partnered with a Zambian company
to develop a new copper mine in central Zambia, the company's
director said on Monday. 
    Meanwhile, the more serious tone from European central
bankers helped reassure investors, though asset managers
remained cautious. 
    "It's taking the optimistic view that things are on the path
to improvement," said Philip Petursson, director of the
portfolio advisory group at Manulife Asset Management. "The
leaders in Europe are being a little more serious about how
they're treating the issues."
    Petursson, however, questioned whether the latest upswing
was sustainable.
    "A lot of this rally has been bought on hope instead of
fact," he said. "I'm not entirely convinced we're out of the
woods."
    That was an opinion echoed by Picardo. "We are now on the
verge of entering what is typically a very volatile stage in the
markets," he said.
    Elsewhere, Air Canada, down 2.5 percent to C$1.15,
said passenger levels for July fell slightly from a year
earlier. Meantime, WestJet Airlines, off 0.06 percent
at C$16.00, said it flew fuller planes in the month.