August 13, 2009 / 9:27 PM / in 8 years

CANADA STOCKS-TSX surges as economic hope drives commodities

* TSX rises 1.55 percent to 10,825.56

* Mining, energy, industrials lead broad rally

* Surprise European growth helps sentiment

By Cameron French

TORONTO, Aug 13 (Reuters) - Toronto’s main stock index rose sharply on Thursday as surprisingly strong European economic data buoyed sentiment and commodity prices, sparking a resource-led rally.

Reports showing recessions in Germany and France ended in the second quarter overshadowed disappointing U.S. retail sales and weekly jobless claims data, and allowed investors to become increasingly more comfortable with risk in their portfolios.

Copper rallied to a 10-month peak on the strong sentiment and gold rose on concerns about inflation, boosting the TSX index’s materials sector by 2.84 percent. Energy issues gained 1.88 percent as oil also ended higher.

“It does seem as though it’s the premise that the North American and global economies are strengthening,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

“It’s a good rally on the back of that sentiment.”

Among materials issues, Pan American Silver PAA.TO jumped 10.4 percent to C$22.53, and copper and gold producer Quadra Mining QUA.TO rose 7 percent to C$12.51.

Among oil and gas producers, Talisman Energy TLM.TO gained 3.7 percent to C$17.55, while Nexen NXY.TO jumped 3.6 percent to C$23.41.

Altogether, the Toronto Stock Exchange’s S&P/TSX index climbed 165.69 points, or 1.55 percent, to end at 10,825.56.

The blue-chip S&P/TSX 60 <.TSE 60> rose 11.43 points, or 1.79 percent, to close at 651.64, as nine of the 10 TSX subgroups gained during the session.

Industrial stocks rose 2.02 percent, while the telecoms group gained 1.44 percent.

Royal Bank of Canada (RY.TO), the largest stock on the index, climbed 2.2 percent to C$50.71.

T-shirt maker Gildan Activewear (GIL.TO) gained 7.1 percent to C$19.73, as investors looked past weak earnings at the company’s strong outlook for 2010.

The only sector in retreat was the traditionally defensive consumer staples group. It slipped 0.3 percent.

Investors were encouraged on Wednesday by the U.S. Federal Reserve’s statement that the U.S. economy is leveling out and that benchmark interest rates would stay near near zero for an extended period.

“The fact that the Fed’s on the sidelines means they’re not going to raise rates,” said Ian Nakamoto, director of research at MacDougall, MacDougall, MacDougall & MacTier.

“Inflation’s low, earnings are being revised up here, and the economy is doing much better now than it was six months ago.”

U.S. stocks rose modestly, as the Dow Jones industrial average .DJI gained 36.58 points, or 0.39 percent to 9,398.19, while Nasdaq .IXIC climbed 10.63 points, or 0.53 percent, to 2,009.35.

$1=$1.09 Canadian Reporting by Cameron French; editing by Peter Galloway

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