CANADA STOCKS-TSX surges on Fed plan, shrugs off Potash slide
* TSX ends up 207.67 points at 12,878.79
* Highest close since September 2008
* Fed stimulus move sends greenback lower, commodities up
* Potash drops 3.3 pct after Ottawa rejects BHP bid (Adds details, quote)
By Jennifer Kwan
TORONTO, Nov 4 (Reuters) - Toronto's main stock index closed at its highest level in more than two years on Thursday as commodity prices soared in reaction to the U.S. Federal Reserve's plan to stimulate the U.S. economy.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished the session up 207.67 points, or 1.64 percent, at 12,878.79, its strongest close since Sept. 19, 2008, led by soaring energy and materials sectors, up 3.4 percent and 2.5 percent, respectively.
The surge higher overpowered a drop in the shares of fertilizer giant Potash Corp (POT.TO: Quote), which was the top net loser on the market.
Potash skidded 3.3 percent to C$141.43, after the Canadian government said after the market close on Wednesday it would block Anglo-Australian miner BHP Billiton's (BLT.L: Quote) $39 billion bid to acquire the company and left little room for a modified offer. [ID:nN03272751] [ID:nN22340110]
Fund managers and analysts said the fallout will affect just a few major companies, and that Canada remains mostly open for business. Rejection of the bid could also prompt more clarity on existing rules on foreign investment. [ID:nN04105003] [ID:nN03138111]
Elvis Picardo, an analyst and strategist at Global Securities in Vancouver, said it's "quite remarkable that the stock hasn't reacted more adversely".
"The two factors that are supporting it are extremely positive sentiment in the overall markets. Secondly, the stock is being seen as a fairly attractive investment at these levels," he said.
Seven of the TSX index's 10 main groups ended higher. The blue chip S&P/TSX 60 index closed 11.64 points higher, or 1.6 percent, at 737.73.
Big names on the upside included Suncor Energy (SU.TO: Quote), ahead 7.8 percent at C$35.48, and Canadian Natural Resources (CNQ.TO: Quote), which rose 4.2 percent to C$39.33. Both were bolstered by a rise in the oil price above $86 a barrel, as well as earnings that beat market expectations. [O/R] [ID:nSGE6A30C2] [ID:nSGE6A30FZ]
Barrick Gold (ABX.TO: Quote) rose 1.1 percent to C$49.20, and Teck Resources TCKb.TO climbed 4 percent to C$47.80, as commodity-related stocks surged on the Fed's announcement on Wednesday that it would buy $600 billion more in government bonds by the middle of next year to try to revive the U.S. economy. [ID:nFEDAHEAD]
"The U.S. economy is not growing quickly enough and therefore the Federal Reserve needs to step in and stimulate the economy," said Paul Mesburis, senior portfolio manager at Excel Investment Counsel Inc.
"That means that interest rates will stay low in the U.S. ... in order to get the economy back on track and the quantitative easing basically means that investors and the fund managers that have been sitting on cash have now capitulated and are getting into the market today and buying equity."
Elsewhere, Manulife Financial's (MFC.TO: Quote) third-quarter loss widened fivefold as the insurer took C$3 billion in charges related to actuarial assumption changes and the outlook for its U.S. business. However, Manulife shares, the most heavily traded on the TSX, soared 9.4 percent to finish at C$14.11 as the market had expected worse results. [ID:nN04213369]
($1=$1.00 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)
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