4 Min Read
* TSX up 30.40 points, or 0.29 percent, at 10,659.87
* Federal Reserve sees signs of a more stable economy
* Energy sector, up 1 percent, as oil climbs above $70 (Adds closing numbers, details, quote)
By Jennifer Kwan
TORONTO, Aug 12 (Reuters) - Toronto's main stock index finished higher on Wednesday, following two days of losses, after the U.S. Federal Reserve said it saw some signs of a more stable economy after 20 months of recession.
The Fed also kept its benchmark short-term interest rate steady near zero and said it would likely stay there for an extended period. [ID:nN1272730]
The big energy and financial sectors, up 1 percent and 0.4 percent, respectively, were the major drivers behind the index's move higher, while mining companies also showed some strength.
Oil prices CLc1 settled higher above $70 a barrel on optimism about the economy, which offset concerns about rising inventories. [ID:nSP527509]
"Crude oil has gotten a bit of a bounce after the Fed comments," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
"As far as the financials are concerned, any indication that comes out at all about the economy improving in North America is going to help the banks and the financial stocks."
The S&P/TSX composite index .GSPTSE was up 30.40 points, or 0.29 percent, at 10,659.87, with six of its 10 main groups higher. The blue chip S&P/TSX 60 index .TSE60 closed 1.24 points higher, or 0.2 percent, at 640.21.
The higher close came after a volatile midafternoon session that saw the composite index give up early gains and dip briefly into the red, before heading higher again. U.S. stocks also trimmed gains briefly shortly after the Fed statement.
"What we saw in the equity market here mirrors what we saw in the bond market right after the Fed's announcement," said John Johnston, chief strategist for Harbour Group at RBC Dominion Securities.
"Right after the Fed's announcement, in which it said it will have finished all their Treasury purchases by October, bond yields spiked and with that you saw the equity market coming under pressure."
The Fed said it will extend the duration but not the dollar amount of a program to buy long-term government securities.
U.S. Treasury prices fell after the statement in apparent disappointment that the central bank did not increase the amount of debt that it plans to buy, but subsequently regained some ground. [ID:nN1272730]
The TSX's materials sector, home to mining and fertilizer companies, fell 0.5 percent but the picture was mixed among individual names. Teck Resources TCKb.TO climbed 3.6 percent to C$28.67, while Barrick Gold (ABX.TO) fell 1.5 percent to C$36.47.
Manulife Financial (MFC.TO) rose 1 percent to C$22.42 after saying it bought AIC Ltd's Canadian retail investment fund business. [ID:nN12537950]
$1=$1.09 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson