CANADA STOCKS-TSX rises in broad rally, materials lag

Mon Oct 18, 2010 5:26pm EDT
 
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   * TSX gains 0.47 percent to 12,668.01
 * Nine of TSX's 10 main sectors higher
 * Materials lone declining group, hurt by gold, Potash
 (Adds details)
 TORONTO, Oct 18 (Reuters) - Toronto's main stock index
closed higher on Monday in a broad advance led by financial
issues, which were supported by a healthier profit at Citigroup
and an acquisition by Royal Bank of Canada RY.TO.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE gained 58.94 points, or 0.47 percent, to close at
12,668.01. Nine of the 10 main TSX sectors rose, with
financials up more than 1 percent.
 Investors continued to be encouraged by the prospect of the
Federal Reserve offering extra economic stimulus to the U.S.
economy, a prospect that has helped fuel the TSX's recent
rally.
 "There's not much to be negative on," said Ian Nakamoto,
director of research at MacDougall, MacDougall &
MacTier.
 "Central banks have let it be known that interest rates
will stay low for a long period of time. They're going to be
providing liquidity and some of that will go into the stock
market and other assets. Earnings are continuing to move up and
valuations are reasonable.
 "Investor sentiment is turning more positive but I wouldn't
say it's euphoric."
 U.S. bank Citigroup reported a better than expected
quarterly profit on Monday, stealing the spotlight from fears
about the exposure of major U.S. banks to foreclosure losses.
[ID:nN18138072] [ID:nN11106777]
 Royal Bank rose 1.17 percent to C$56.20 after it offered to
buy British fund manager BlueBay Asset Management BBAY.L for
963 million pounds ($1.5 billion) as Canada's biggest bank
looked to cement its position as a top 10 global wealth
manager. [ID:nLDE69H06R]
 Other banks were also strong performers, with Canadian
Imperial Bank of Commerce CM.TO adding 1.4 percent to
C$78.36, while Bank of Montreal BMO.TO and Bank of Nova
Scotia BNS.TO each rose nearly 1 percent.
 "The U.S. liked Citibank earnings, their financials seem to
be better and I think that has spilled over to our banks," said
John Kinsey, portfolio manager at Caldwell Securities.
 The sole weak spot was the index's materials group, down
0.49 percent, largely because of falling gold-mining shares.
The price of gold fell sharply and looked set to post its
biggest two-day loss in three months, but it ended the session
about flat. Goldcorp G.TO slipped 0.84 percent, while Kinross
Gold K.TO dropped 0.94 percent.
 Potash Corp POT.TO also put pressure on the materials
group, dropping 0.98 percent to C$145.34 after a newspaper
report said the province of Alberta's provincial money manager
was leading discussions with some of Canada's pension funds on
a plan to preserve the independence of the fertilizer maker.
[ID:nN18258207]
 With its options running out and time running out, Potash
Corp may soon have little choice but to negotiate with miner
BHP Billiton, which has made a $39 billion takeover offer for
Potash that Potash, the world's largest fertilizer supplier,
has flatly rejected. [ID:nN18228432]
 Looking ahead, the Bank of Canada is expected to maintain
its overnight target rate on Tuesday at 1.0 percent and
downgrade its economic growth forecasts for 2010 and 2011, with
further explanation due on Wednesday in its Monetary Policy
Report. [ID:nTOR007843] [ID:nN15144891]
 ($1=$1.01 Canadian)
 (Reporting by Ka Yan Ng; editing by Peter Galloway)