CANADA STOCKS-TSX ends higher as hopes for Europe boost banks

Wed Sep 5, 2012 4:44pm EDT
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* TSX closes up 48.44 points, or 0.41 percent, at 11,990.14
    * Hopes for drastic ECB action at Thursday meeting boosts
    * Miners, energy companies also help with rise
    * Junior miner AuRico plummets 20 pct after lowered output

    By Alastair Sharp
    TORONTO, Sept 5 (Reuters) - Canada's benchmark stock index
ended higher on Wednesday as hopes for aggressive bond-buying
action from the European Central Bank boosted banking shares.
    Three of the country's biggest banks jumped more than 1
percent each ahead of a crucial ECB meeting on Thursday when the
central bank's president, Mario Draghi, is expected to announce
strong steps to ease pressure on Spanish and Italian borrowing
    "There is optimism that Draghi in his speech tomorrow will
announce a comprehensive plan where there will be measures to
strengthen the Spanish banks and where bond yields will be
bought at a certain level without quantifying them," said
Michael Simpson, a senior portfolio manager at Sentry Select
Capital Corp. 
    Simpson said Canadian bank stocks would be immediate
beneficiaries of any strengthening of the European banking
system, while improved growth prospects for the region would
ultimately also lift resource stocks.
    Canadian mining and energy stocks notched smaller gains, led
by fertilizer company Potash Corp's 1.8 percent rise. 
    Suncor Energy Inc, the country's largest energy
company, gained 0.7 percent to C$31.35 after it said on Tuesday
that output at its oil sands operations increased in August
compared to the previous month.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 48.44 points, or 0.41 percent, at 11,990.14.
    The index gain reversed a slip since mid-August, when the
benchmark index tested highs near 12,200.
    Royal Bank of Canada gained 1.4 percent to C$55.63,
Toronto Dominion Bank rose 1.2 percent to C$81.16 and
Canadian Imperial Bank of Commerce closed up 1.2 percent
at C$77.11.
    The trio were among a string of major Canadian banks which
surprised last week with stronger profits and increased
dividends as consumers kept borrowing. 
    "The reporting validated that things aren't quite as bad on
the consumer side as perhaps some people had feared," said Paul
Hand, managing director at RBC Capital Markets. "And the
dividend increases were a pretty big vote of confidence."
    On the negative side, AuRico Gold Inc slumped 20.4
percent to C$5.49 after the miner cut its full-year production
forecast for the second time in as many months. 
    "That's the nature of the junior resource stocks - you don't
miss your production or you will be punished by the market,"
Sentry's Simpson said.
    Shares in Rona Inc slipped 2.4 percent to C$12.51
as investors saw chances of a takeover of the Quebec-based
home-improvement retailer and distributor fading after the
separatist Parti Quebecois won Tuesday's provincial election in
    TransAlta Corp slipped 3.9 percent after the power
producer sold shares to help pay for a 125 megawatt dual-fuel
power station in Western Australia for $318 million.