CANADA STOCKS-TSX extends rally as gold-miners buoy market

Wed Aug 10, 2011 5:29pm EDT
 
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 * TSX up 89.63 pts, or 0.74 pct, at 12,198.89
 * Five of 10 sectors stronger
 * Gold miners drive gains
 * Energy issues rise with the price of oil
 * Financials sink on euro zone fears
 (Adds analyst comment, further details)
 By Trish Nixon
 TORONTO, Aug 10 (Reuters) - Toronto's main stock index
rallied for a second day on Wednesday, erasing Monday's
dramatic losses, as gold-mining shares rose on record bullion
prices, outweighing a sinking financial sector.
 The TSX gained even as global stocks slumped on speculation
about the strength of French banks holding troubled peripheral
euro zone debt that tapped into investors' worst fears about
possible contagion from the euro zone debt crisis. [MKTS/GLOB]
 The price of gold rose to a record high, extending its
biggest rally since 2008, as anxious investors picked up the
safe-haven asset, which helped buoy Toronto's resource-heavy
index. [GOL/]
 "We've managed to outperform the rest of the planet ...
mostly on the precious metals sector," said Francis Campeau, a
broker at MF Global Canada in Montreal.
 "Money is moving out of the banks and into gold stocks or
miners."
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed up 89.63 points, or 0.74 percent, at
12,198.89.
 The two-day rally put the index into positive territory for
the week, wiping out losses from Monday when the index plunged
to its lowest level in nearly a year.
 Five of the 10 sectors ended higher, led by the
heavy-weight materials sector, which includes miners, up 3.6
percent. The gold-mining sub-group added 4.7 percent.
 Eight of the top ten influential gainers on the index were
precious metal miners. Barrick Gold ABX.TO topped the list,
up 6.2 percent C$49.72, followed by Goldcorp G.TO, which
added 7 percent to C$50.54.
 The energy sector climbed 1.03 percent, boosted by rising
oil prices. U.S. crude futures rose 4.5 percent after a
government report showing oil inventories fell. [O/R]
 Canadian Natural Resources CNQ.TO, up 1.6 percent at
C$35.35, and Suncor Energy SU.TO, up 0.9 percent at C$31.28,
were among the index's top gainers.
 Meanwhile, the financial sector sank 1.2 percent as
concerns about the strength of French banks dragged Canada's
big banks and insurers lower.
 Manulife Financial MFC.TO was the heaviest weight, down
5.2 percent at C$12.50, while Toronto Dominion Bank <TD.TO fell
1.5 percent to C$73.93, and Bank of Nova Scotia BNS.TO lost
1.7 percent to C$51.90.
 The banks are sloppy because of the global pressure on
them," said Paul Hand, managing director at RBC Capital
Markets.
 But he noted that despite market jitters there seemed to be
a healthy exchange of views as people shifted their portfolios
around.
 "We're starting to see the asset allocators, with interest
rates being so low, take money out of fixed income and
increase their equity exposures. That's been one of the
underlying supports."
 In individual company news, shares of Rona Inc's RON.TO
fell 4.9 percent after it reported its quarterly profit dropped
a steeper-than-expected 40 percent as Canadian consumers cut
spending on its home improvement products. [nN1E7790V2]
 CAE Inc's CAE.TO stock fell 2.5 percent after the
Canadian company said budget pressure in the United States and
Europe could squeeze its military flight simulator business in
the short term. [ID:nN1E7791K4]
 Quebecor Inc QBRa.TO reported solid growth at its
fledgling wireless network and announced it would buy back
about 10 percent of its stock, sending its share up 6.9 percent
to C$30.19. [ID:nL3E7JA2J7]
 Penn West Petroleum Ltd's PWT.TO second-quarter profit
more than halved after Alberta wildfires and floods in
Saskatchewan hit production, prompting it to lower its
full-year output target. Shares of the oil and gas producer
still benefited from the broader sector's rise, adding 0.96
percent to C$18.91.
 (Editing by Jeffrey Hodgson)