November 4, 2010 / 3:02 PM / 7 years ago

CANADA STOCKS-TSX surges on Fed plan despite Potash drop

 * TSX rises 201.05 points, or 1.59 percent, to 12,872.17
 * Fed stimulus move sends greenback lower, commodities up
 * Potash drops 3.9 pct after Canada rejects BHP bid  (Adds details, quote)
 By Jennifer Kwan
 TORONTO, Nov 4 (Reuters) - Toronto’s main stock index rallied strongly on Thursday morning as commodity prices soared on the U.S. Federal Reserve’s plans for more monetary easing, overshadowing a drop in Potash Corp shares after the Canadian government blocked BHP Billiton’s takeover bid.
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE rose as high as 12,895.60, its loftiest level since late September 2008, in a broad rally led by its soaring energy and materials sectors, up 3.1 percent and 1.8 percent, respectively.
  Potash Corp (POT.TO) skidded nearly 4 percent to C$140.52 after Ottawa blocked Anglo-Australian miner BHP Billiton’s (BLT.L) $39 billion bid to acquire the fetilizer giant and left little room for a modified offer. [ID:nN03272751] For more stories, please see: [ID:nN22340110]
  ”It’s negative for the (Potash) stock but it’s been overwelmed by broader macro events,“ said Fergal Smith, managing market strategist at Action Economics. ”I think at face value it appears to make it more difficult for a successful takeover of Potash.“
  Big names on the upside included Suncor Energy (SU.TO), up 7.8 percent at C$35.45, Barrick Gold (ABX.TO), which rose 2.3 percent to C$49.80, and Teck Resources TCKb.TO, up 3 percent at C$47.35, 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. For Take a Look, please see: [ID:nFEDAHEAD]
  ”It’s obviously the FOMC (Federal Open Market Committee) announcement yesterday, their QE (quantitative easing) program,“ Smith said. ”That’s seen accelerated rotation out of the U.S. dollar into asset markets broadly. Most particularly into commodity markets.
 “It’s added to liquidity so the Fed is increasing the supply of dollars and those dollars are chasing returns.”
  At 10:17 a.m. (1417 GMT), the TSX index was up 201.05 points, or 1.59 percent, at 12,872.17, with nine of its 10 main groups higher. The small healthcare sector sank 1 percent.
 ($1=$1.00 Canadian)  (Reporting by Jennifer Kwan; editing by Peter Galloway)                                        

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