CANADA STOCKS-TSX dips, bounces back after Fed statement

Wed Aug 12, 2009 3:35pm EDT
 
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 * 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: Quote), up 3 percent at C$35.93, leading the way on firm oil
prices CLc1, while Canadian Natural Resources (CNQ.TO: Quote)
climbed 1.2 percent at C$62.97.
 The country's biggest bank, Royal Bank of Canada (RY.TO: Quote),
rose 1.1 percent to C$50.02.
 Teck Resources (TCKb.TO: Quote) climbed 3.9 percent to C$28.74.
 ($1=$1.09 Canadian)
 (Reporting by Jennifer Kwan; editing by Rob Wilson)