CANADA STOCKS-TSX clings to gains after Italy vote

Tue Nov 8, 2011 11:05am EST
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   * TSX up 35.95 points, or 0.29 percent, at 12,497.93
 * Touches two-month intraday high, gold miners drag
 (Updates with details, commentary)
 By Claire Sibonney
 TORONTO, Nov 8 (Reuters) - Toronto's main stock index
retreated from its two-month high touched earlier on Tuesday
morning, after a crucial budget vote in Italy hinted that Prime
Minister Silvio Berlusconi had lost his parliamentary majority,
piling further pressure on him to resign.
 But after briefly turning negative on concerns over the
euro zone crisis, the TSX pushed back into positive territory,
led by heavyweight resource companies and banks.
 Among the top advancers, Potash Corp (POT.TO: Quote) climbed 1.8
percent to C$50.12, Teck Resources TCKb.TO advanced 2.6
percent to C$40.33 and Royal Bank of Canada (RY.TO: Quote) added 0.5
percent to C$46.24.
 Investor sentiment continued to be dominated by
developments in Europe. Berlusconi won the budget vote,
although Italy's opposition leader asked him to resign and said
the country runs a real risk of losing access to financial
markets in coming days.
 Italy has displaced Greece as the focus of the euro zone's
sovereign debt crisis, with government bond yields nearing
unsustainable levels, which could force the EU's third largest
economy to seek a bailout that Europe cannot afford.
 "It looks like the Greece situation will now resolve itself
and that will be very positive for all of Europe. And while
it's not a permanent solution it's a good interim solution,"
said Douglas Davis, chief executive officer at  Davis-Rea.
 "I don't think Italy is in the sort of shape that Greece
was in," added Davis. "At least they have a better
infrastructure and a more reliable revenue system, and I don't
think it's nearly the problem that Greece has been."
 At 10:47 a.m. (1547 GMT), the Toronto Stock Exchange's
S&P/TSX composite index .GSPTSE was up 35.95 points, or 0.29
percent, at 12,497.93. Shortly after the open, the index hit an
intraday high of 12,542.58, its best level since Sept. 9.
 Also pressuring broader gains, the gold-mining subsector
slipped 0.2 percent after a surge in the previous session.
 On Monday, the Toronto Stock Exchange's subindex of gold
producers , which often climbs on investor
uncertainty, rallied to its strongest level since Sept. 22.
 Bullion prices were holding around their highest levels in
a month and a half as investor unease deepened over the threat
of the euro zone debt crisis to the global economy. [GOL/]
 ($1=$1.01 Canadian)
 (Reporting by Claire Sibonney; editing by Rob Wilson)