CANADA STOCKS-TSX surges on Fed plan despite Potash drop

Thu Nov 4, 2010 10:57am EDT
 
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 * 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)