CANADA STOCKS-TSX jumps to near 2-month high on Europe deal

Thu Oct 27, 2011 5:23pm EDT
 
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 * TSX closes up 279.38 pts, or 2.3 pct, at 12,465.44
 * Biggest single-day gain in more than two weeks
 * Financials, energy sectors lead gains
 * First Quantum Minerals soars 14.2 pct
 (Adds details, comments)
 By Jon Cook
 TORONTO, Oct 27 (Reuters) - Canadian stocks soared more
than 2 percent on Thursday to their highest level in nearly two
months, buoyed by optimism over a long-awaited deal by European
leaders to tackle the euro-zone debt crisis.
 The agreement included a plan to leverage the euro zone's
bailout fund to 1 trillion euros, a 50 percent haircut for
private holders of Greek debt and bank recapitalization.
[MKTS/GLOB]
 While the news was cheered by the markets, analysts were
guarded about the sustainability of the rally.
 "There's a lot of hard sledding yet to go and the devil is
always in the details, but the broad outline of this is pretty
positive," said Robert Gorman, chief portfolio strategist at TD
Waterhouse. "I'm sure we'll have some backing and filling here,
but I suspect we will move higher."
 Financial stocks, up 2.8 percent, played the biggest role
in leading the market higher. Canadian banks have traded in
sympathy with European lenders for much of the crisis even
though they have little or no exposure to Greece.
 Royal Bank of Canada (RY.TO: Quote) did the most to lead the
financial sector higher, posting a 3.1 percent gain to
C$49.66.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE ended up 279.38 points, or 2.3 percent, at 12,465.44,
its biggest one-day gain in more than two weeks. The session
high was 12,526.29, its highest level since Sept. 9.
 Energy stocks, up 3 percent, were also a major driver. Oil
rallied more than 4 percent as the European deal and supportive
U.S. data eased concerns that economic weakness could curb
energy demand. [O/R]
 Shares of Suncor Energy Inc (SU.TO: Quote), up 4.9 percent at
C$32.80, led the sector and market higher.
 A 7.7 percent rally in base metal miners helped drive the
heavyweight materials sector higher as copper prices jumped on
the European news. [MET/L]
 Teck Resources TCKb.TO led the sector, gaining 8.1
percent to C$40.35 after news its third-quarter net income more
than doubled, driven by strong results from its coal and copper
businesses. [ID:nN1E79P2GI]
 First Quantum Minerals (FM.TO: Quote) was also among the biggest
gainers, jumping 14.2 percent to C$21.24.
 After reporting a doubling in its third-quarter profit,
Potash Corp (POT.TO: Quote) shares were up 1.4 percent at C$50.46 as
strong grain prices boosted demand for the world's top
fertilizer maker's products. [ID:nN1E79P2GK]
 Miner Barrick Gold (ABX.TO: Quote) climbed 0.9 percent to C$48.61
after reporting a 45 percent increase in quarterly profit,
driven by a sharp increase in bullion prices. [ID:nN1E79P2GN]
 In other Canadian company news, BlackBerry maker Research
In Motion Ltd's RIM.TO shares rose 1 percent to C$21.10, a
day after plunging nearly 8 percent.
 RIM lagged the rally after it was hit by a class action
lawsuit filed by consumers in the United States and Canada for
a days-long service outage earlier this month. ID:nN1E79Q0QH]
 Solid U.S. economic news contributed to the market's
euphoria, as data showed third-quarter GDP growing at its
fastest pace in a year. [ID:nN1E79Q0FK]
 Analysts said the positive U.S. data and the European deal
had helped quell fears of a double-dip recession, but warned
the good news was unlikely to produce an influx of new
institutional investing.
 "I don't think the institutional money out there is really
at that point where it's (saying) 'OK, let's dive in and see
what happens'," said Andrew Pyle, wealth adviser and associate
portfolio manager at ScotiaMcLeod.
 Pyle added a key factor in the recovery will be what
happens to European pension funds and life insurance companies
that are exposed to Greek debt.
 "What happens to them when you take a 50 percent haircut on
Greek debt? That will be one of the questions that has to be
answered," Pyle said.
 ($1=$0.99 Canadian)
 (Editing by Jeffrey Hodgson and Peter Galloway)