CANADA STOCKS-TSX bounces back up after Bernanke blip

Fri Aug 31, 2012 11:20am EDT
 
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* TSX up 92.68 points, or 0.78 percent, at 11,979.33
    * Bernanke speech causes volatility
    * Index opens higher, falls into red, bounces back
    * Gold miners, banks lead ascent

    By Alastair Sharp
    TORONTO, Aug 31 (Reuters) - Canadian equities resumed an
upward trajectory on Friday morning after dipping sharply
immediately after a speech by U.S. Federal Reserve Chairman Ben
Bernanke that did not explicitly point to imminent monetary
easing.
    "Markets are very easily moved up and down," said Sal
Masionis, a stockbroker at Brant Securities in Toronto. "You've
really got to parse every little thing he says."
    In the speech at a meeting of central bankers in Jackson
Hole, Wyoming, Bernanke said progress in bringing down U.S.
unemployment was too slow and the central bank would act as
needed to strengthen the economic recovery.
  
    As the speech was digested, its message lent support.
    "The speech comes across as a staunch defence of the
effectiveness of unconventional monetary policy," Paul Dales, a
senior economist at Capital Economics, wrote in a note.
    He said the Fed would likely announce a third round of asset
purchases at a mid-September meeting.
    Such a move is seen as a positive in Canada, which watches
its southern neighbor and main trading partner closely for signs
of economic recovery.
    "The U.S. continues to be the only safe haven in this
weakening global economy. The data keeps improving and showing
strong signals," said Barry Schwartz, vice president and
portfolio manager at Baskin Financial Services.
    By 11:03 a.m. (1503 GMT) the Toronto Stock Exchange's
S&P/TSX composite index was up 92.68 points, or 0.78
percent, at 11,979.33. It had fallen as low as 11,872.26 soon
after Bernanke's speech. 
    The index had dipped in every session so far this week and
closed on Thursday at its lowest level in two weeks.
    Friday's rise was led by gold miners Goldcorp Inc and
Barrick Gold Corp, which each gained 2.7 percent, and
by Royal Bank of Canada, which rose 0.9 percent after
surprising investors with a dividend increase and solid profit
growth on Thursday. 
    Domestically, growth in the Canadian economy positively
surprised investors at an annualized 1.8 percent in the second
quarter, as strong business investment overshadowed a small
fiscal drag, data released on Friday showed.