CANADA STOCKS-TSX rallies to 2-week high on ECB, U.S. data

Thu Sep 6, 2012 5:07pm EDT
 
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* TSX closes up 1.25 pct, adding 149.59 points to 12,139.73
    * ECB bond-buying helps index to highest close since May 2
    * Miners, oil and gas companies lead rise

    By Alastair Sharp
    TORONTO, Sept 6 (Reuters) - Canada's benchmark stock index
jumped more than 1 percent on Thursday, lifted by broad gains in
commodity stocks, as a European Central Bank bond-buying plan
and positive U.S. economic data boosted investor sentiment.
    The index jumped in early trade after the ECB launched a
potentially unlimited bond-buying program in a bid to draw a
line under the region's debt crisis. Signs of a pickup in the
struggling U.S. labor market also added to gains.
    "We got off to a pretty fast start and it never let up. It
was a quite spectacular day for a change," said John Kinsey, a
portfolio manager at Caldwell Securities. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed 1.25 percent higher, adding 149.59 points to
hit 12,139.73, the index's highest closing level since May 2.
    At one point it reached 12,144.34, its highest intra-day
level since Aug 21. It was the biggest one-day gain for the
index in about a month. All 10 major index sectors rose, led by
the energy and materials groups.
    Signs that European and U.S. growth could get back on track
provided a fillip to Canada's deep lineup of mining and oil and
gas companies, which are acutely sensitive to global demand.
    "It's clearly a positive for this market - the Toronto
market is a risk-on market, a commodity-weighted market -
because we will not be able to get clarity on commodities if
Europe is mired in recession and political stalemate," said John
Stephenson, senior vice-president at First Asset Investment
Management Inc.
    ECB President Mario Draghi sought to back up a July pledge
to do whatever it takes to preserve the euro zone currency with
the bond-buying plan, which he said would address bond market
distortions and "unfounded" fears about the survival of the
euro.  
    "They've really had to pull out the big bazooka, which is in
essence to say 'we stand by to buy unlimited quantities of
sovereign bonds of distressed countries'," said Gavin Graham,
president at Graham Investment Strategy in Toronto.
    Commodity prices were broadly higher, with oil and gold both
notching gains.  
    The oil price was also boosted by U.S. government data that
showed stockpiles fell more sharply than expected last week.
 
    
    HEALTHY U.S. HELPS
    Meanwhile, data showed U.S. companies added staff in August
at the fastest clip in five months and a gauge of service sector
employment also improved. Another report showed new claims for
jobless benefits fell last week to the lowest level in a month.
 
    "Most of our trade is still with the U.S.," said Caldwell's
Kinsey. "We need a healthy U.S. economy to keep us in the
black."
    Among oil and gas shares, Cenovus Energy Inc jumped
4.1 percent to C$33.30, Canadian Natural Resources rose
2.5 percent to C$30.09 and Suncor Energy Inc added 1.6
percent to C$31.85, accounting for the three biggest positive
influences on the index.
    Shares of ShawCor Ltd surged 20.3 percent to
C$42.20 after the company, which has a dominant position
providing niche pipeline services to the oil and gas industry,
said it was exploring the possibility of putting itself up for
sale in a deal that could fetch C$3 billion ($3.05 billion) or
more. 
    Major Drilling Group International Inc jumped 11.7
percent to C$10.20 after reporting record quarterly earnings and
saying that demand remains strong. 
    Encana Corp gained 1.9 percent to C$21.77 after the
natural gas producer said an internal investigation determined
it did not collude with Chesapeake Energy Corp to lower the
price of land acquisitions in Michigan two years ago.
 
    Base metals miner Inmet Mining Corp gained 3.6
percent to C$45.77. It said it plans to expand its footprint in
Panama with an offer to acquire Petaquilla Minerals Ltd 
for about C$112 million.