CANADA STOCKS-Banks help keep TSX above 12,000

Fri Aug 17, 2012 10:41am EDT
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* TSX up 35.32 points, or 0.3 percent, at 12,067.90
    * Banks lead rise ahead of end-August earnings period

    By Alastair Sharp
    TORONTO, Aug 17 (Reuters) - Canada's main stock index rose
on Friday on modest gains in heavyweight banks, miners and
energy companies, buoyed by positive U.S. data and easing fears
about Europe's debt crisis.
    But investors questioned how much higher the Canadian index
could go as it tests levels above 12,000 points last seen in
early May.
    "The index is getting close to being what I would consider
overbought," said Julie Brough, vice president at Morgan Meighen
& Associates. "I question whether this is the beginning of a
prolonged upward trend or more of a relief rally."
    Canadian inflation came in tamer than forecast in July,
raising expectations that the Bank of Canada will keep interest
rates at near-record lows well into next year. 
    Meanwhile, a gauge of future U.S. economic activity improved
in July, while U.S. consumer sentiment improved in early August.
    An improving U.S. economic outlook has positive implications
for Canadian equities, given the major trade conducted between
the two countries.
    Comments from Germany's Angela Merkel supporting the
European Central Bank's crisis-fighting strategy also helped
    Banks -- which line up to report quarterly earnings in late
August -- were the biggest positive influence, with Royal Bank
of Canada up 0.6 percent to C$53.75 and Toronto Dominion
Bank rising 0.8 percent to C$81.09.
    By 10:20 am (1420 GMT), the Toronto Stock Exchange's S&P/TSX
composite index was up 35.32 points, or 0.3 percent,
at 12,067.90.
    Oil and gas companies also added to the gains, with Suncor
Energy Inc leading the way with a 0.8 percent rise to