CANADA STOCKS-TSX jumps 2 pct on Europe hopes, China move

Wed Nov 30, 2011 11:34am EST
 
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   * TSX up 290.42 pts, or 2.5 pct, at 12,023.36
 * Central banks move to ease market liquidity
 * China cuts bank reserves in policy shift
 (Adds details, analyst comments)
 By Jon Cook
 TORONTO, Nov 30 (Reuters) - Toronto's main stock index rose
more than 2 percent on Wednesday morning as resource issues
jumped on an agreement by global central banks to tackle the
euro zone debt crisis and a move by China to ease credit
strains.
 Commodity prices, particularly for oil, gold and base
metals, rose on renewed investor optimism for the global
economy, lifting the TSX's heavily weighted materials sector,
which rose more than 3 percent. [O/R] [GOL/] [MET/L]
 Goldcorp (G.TO: Quote) was up 4.8 percent at C$53.70 and Barrick
Gold (ABX.TO: Quote) gained 2.6 percent to C$52.81, leading the gold
subsector's rise. The gains came as bullion prices climbed more
than 2 percent in response to a falling U.S. dollar as central
banks moved to inject more liquidity into the global financial
market. [ID:nL5E7MU118]
 Oil and gas issues continued their rally, jumping 3.5
percent as U.S. crude rose above $100 a barrel to reach its
highest level in two weeks.
 Suncor Energy (SU.TO: Quote) jumped 4.3 percent to C$30.50 to lead
energy gains. Canadian Natural Resources (CNQ.TO: Quote) was also
strong, rising 4 percent to C$37,82.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE was up 290.42 points, or 2.5 percent, at 12,023.36 by
mid-morning. It was the index's biggest rise in a month.
 The move by the TSX mirrored hefty gains on other global
markets as central banks from the world's leading economies,
including the Bank of Canada, the U.S. Federal Reserve and the
European Central Bank, agreed to lower the cost of dollar swap
lines by 50 basis points, as well other measures.
[ID:nN9E7LI02P]
 The global rally started earlier in the day when China's
central bank moved to ease credit strains by cutting reserve
requirements for its commercial lenders by 50 basis points -
it's first drop in nearly three years. [ID:nL3E7J51YT]
 The move, which is expected to free up funds that could be
used for lending to cash-strapped small firms, came as China's
economic growth has eased for three straight quarters due to
tight credit at home and flagging demand overseas.
 The Chinese shift to an easing policy and the co-ordinated
move by the central banks came in response to concerns the euro
zone's debt crisis would cause another global slowdown.
 Canadian equities markets were "internally very oversold"
over the last 10 days as worries about European debt contagion
led to repeated selloffs, said Sid Mokhtari, market technician
and director, institutional equity research, CIBC World
Markets.
 "You just needed a cause and you've got the catalyst this
morning from China and from the co-ordinated effort of all the
central bankers," said Mokhtari. "They needed to give it a jolt
and they did, and the market's responding accordingly."
 The TSX financial sector, which has little direct exposure
to European debt assets, had its best jump in a month, rising
2.6 percent on the strengthened European outlook.
 Royal Bank of Canada (RY.TO: Quote) led the way, gaining 3 percent
to C$46.37.
 In individual company news, TMX Group (X.TO: Quote) was down 2.9
percent to C$43.47 after the competition regulator said it has
"serious concerns" about a C$3.8 billion proposal by Maple
Group to take over the owner of the country's largest equity
exchange.
 ($1=$1.02 Canadian)
 (Editing by Rob Wilson)