CANADA STOCKS-TSX surges on Fed plan, shrugs off Potash slide

Thu Nov 4, 2010 4:56pm EDT
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   * 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, 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 $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 .TSE60 closed 11.64 points higher,
or 1.6 percent, at 737.73.
 Big names on the upside included Suncor Energy SU.TO,
ahead 7.8 percent at C$35.48, and Canadian Natural Resources
CNQ.TO, 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 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 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)