CANADA STOCKS-TSX rises as China hopes boost energy shares

Thu Aug 9, 2012 5:03pm EDT
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* Main index up 77.09 points, or 0.65 percent, at 11,858.13
    * Energy stocks lead rise as China policy eyed
    * U.S. and European central bank action also expected

    By Alastair Sharp
    TORONTO, Aug 9 (Reuters) - Resurgent energy and mining
stocks on Thursday helped Canada's benchmark equity index regain
ground it lost a day earlier as soft Chinese economic data kept
alive talk that central bankers may ease monetary policy to
stimulate growth.
    Shares in Canadian oil and gas companies were lifted as
investors bet that slowing Chinese inflation would give the
central bank of the world's second-largest economy space to
further loosen policy.
    The resource-heavy Toronto stock market pays close attention
to the potential for policy change in China, said Stephen Wood,
chief investment strategist at Russell Investments in New York. 
    "The slowdown in Europe, which is going to be with us for a
good while, is probably less directly impactful on the commodity
complex than what is going on in China, just because of the
nature of their industrial makeup, export makeup and fabrication
makeup," he said.
    Shares in oil and gas company Canadian Natural Resources Ltd
 gained 6.2 percent to C$31.39, playing the biggest role
of any stock in leading the index higher. The company said it
would cut spending but nudged its production outlook higher.
    Independent oil producer Crescent Point Energy Corp 
also helped pull the benchmark index up with a 4.8 percent jump
to C$42.34 after posting a 55 percent increase in profit and
raising its production forecast for the year. 
    The market was also encouraged by optimism that other
central bankers could move to stimulate growth.
    A European Central Bank governing council member said on
Thursday the bank should be ready to intervene decisively soon
to bring down excessive borrowing costs for Spain and Italy,
while Wall Street also expects action from the U.S. Federal
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 77.09 points, or 0.65 percent, at 11,858.13.
The gain eclipsed a fall of about the same size on Wednesday.
    U.S. stock markets notched modest gains on Thursday or none
at all. 
    "We're seeing the S&P 500 flat on the day and the TSX has
got a nice gain to it, and that is very clearly a reflection of
the sentiment around global growth," said Craig Fehr, Canadian
market strategist at Edward Jones in St. Louis, Missouri.
    Conjecture about Chinese central bank action arose after
data on Thursday showed factory output growth in China slowed
and consumer inflation fell to a 30-month low. 
    "If there is one country that's going to move commodity
markets, it's going to be China if you can get demand back on
track," said Gareth Watson, vice president for investment
management and research at Richardson GMP.
    "The market is telling us they expect further steps to be
taken in the near future," he said, referring to U.S. and
European central banks. "Whether they'll be effective is a
completely different issue."
    The Bank of Canada remains one of the only major central
banks considering tightening policy, a view reiterated by
Governor Mark Carney in interviews published on Wednesday.
    Other stocks on the move included retailer Canadian Tire
Corp Ltd, which rose 4.8 percent to C$78.23 after
reporting a higher profit. 
    Coffee chain Tim Hortons Inc fell 2.8 percent to
C$50.84 after reporting disappointing sales in Canada.