August 12, 2009 / 7:41 PM / 8 years ago

CANADA STOCKS-TSX dips, bounces back after Fed statement

3 Min Read

 * TSX up 80.21 points, or 0.75 percent, at 10.709.68
 * U.S. Fed statement prompts brief weakness in equities
 * Energy sector leads TSX higher  (Adds details, quotes)
 TORONTO, Aug 12 (Reuters) - Toronto's main stock index briefly slipped into the red on Wednesday following the Federal Reserve's policy statement, but quickly bounced back after the U.S. central bank made reassuring comments about the economy.
 The Fed said it will extend the duration but not the dollar amount of a program to buy long-term government securities, [ID:nN12151641], which prompted a spike in U.S. Treasury bond yields.
 "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."
 But eventually the equity markets recovered as investors took comfort on the portion of the policy statement that said the U.S. economy was showing signs of leveling out 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.
 At 3:20 p.m. (1920 GMT), the S&P/TSX composite index .GSPTSE was up 80.21 points, or 0.75 percent, at 10.709.68, led higher by the energy sector, ahead 1.4 percent, and financials group, up 1 percent.
 Major names contributing to the rise included Suncor Energy (SU.TO), up 3 percent at C$35.93, leading the way on firm oil prices CLc1, while Canadian Natural Resources (CNQ.TO) climbed 1.2 percent at C$62.97.
 The country's biggest bank, Royal Bank of Canada (RY.TO), rose 1.1 percent to C$50.02.
 Teck Resources TCKb.TO climbed 3.9 percent to C$28.74.
 ($1=$1.09 Canadian)  (Reporting by Jennifer Kwan; editing by Rob Wilson)                                      

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