CANADA STOCKS-China plan boosts miners; TSX at 4-month high

Fri Sep 7, 2012 4:48pm EDT
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* TSX jumps 128.28 points, or 1.06 percent, to close at
    * Index hits highest since May 1 as miners bounce
    * China's $157 bln spending plan, Fed easing hopes support
    * Bullion, crude prices gain, benefit Canada's commodity

    By Alastair Sharp
    TORONTO, Sept 7 (Reuters) - Canadian stocks surged to their
highest since early May on Friday as grim U.S. jobs data fueled
hopes for quick action from the Federal Reserve and China's
multibillion-dollar spending plans jolted mining companies
    Bullion raced to a six-month high, helping major gold
miners, as U.S. jobs growth slowed, setting the stage for the
Federal Reserve to pump additional money into the economy of
Canada's main trading partner as early as next week.
    But base metal miners dwarfed those gains as Beijing signed
off on $157 billion of projects to build highways, ports and
airport runways, showing a proactive tilt as it looks to
energize an economy mired in its worst slowdown in three years.
    "It's amazing what a few hundred billion will do for you,"
said John Hughes, a senior mining analyst at Desjardins
    Teck Resources Ltd, a diversified miner which
makes much of its revenue from coal used in industrial
production, jumped 9.2 percent to C$29.51, leading an 8 percent
charge in the overall base metals group.
    Prices for gold, oil, copper and other metals all jumped
sharply, giving the cluster of Toronto-listed companies that
sell these commodities a major boost.
    "They're all up on the back of the view that China is not
slowing, or more importantly, will not be slowing in the
future," Hughes said, pointing out that the detailed spending
plans were approved by a new cadre of Communist Party leaders.
    Investors also cheered signs the Federal Reserve would
follow the European Central Bank in embarking on fresh monetary
easing to help kickstart growth, after payroll data showed fewer
jobs were created than anticipated. 
    "The jobs numbers out of the U.S. today further provides
reason for QE3, which would be positive for gold," said Philip
Petursson, director of the portfolio advisory group at Manulife
Asset Management, referring to a third round of bond-buying
known as quantitative easing.
    Overall, the Toronto Stock Exchange's S&P/TSX composite
index gained 128.28 points, or 1.06 percent, to close
at 12,268.01, its highest closing level since May 1.
    The move added to a sharp jump on Thursday after the ECB
unveiled its plan to bring down the borrowing costs of
struggling euro zone countries and gave the index a 2.67 percent
gain for the week.
    The world's largest gold miner, Barrick Gold helped
carry the index higher, rising 2.6 percent to C$39.27, while
energy companies also gained. Canadian Natural Resources Inc
 was the single biggest positive factor, adding 4.8
percent to C$31.54.
    Crude, copper and other commodities moved higher, and the
combination of news out of Europe, the United States and China
suggested further rises in the Toronto index, which has
underperformed world markets this year, were possible.
    "This rally that started a couple of weeks ago could extend
itself over the next couple of months, given some of the more
positive news in just the last week," Petursson said.
    The governor of the Bank of Canada, Mark Carney, said that
high commodity prices are unambiguously good for the economy and
made clear the central bank would not counter commodity-driven
increases in the value of the Canadian dollar. 
    In company news, shares in yogawear retailer Lululemon
Athletica Inc jumped 12 percent to C$75.50 after the
company reported higher quarterly profit and boosted its
outlook, while vowing to push back against cheaper knock-offs
that could threaten its business. 
    Garda World Security Corp shares jumped 30 percent
to C$11.90, just below the C$12 a share in cash offered by a
consortium led by its founder and chief executive Stephan
Cretier to take the security and cash-handling firm private.