October 20, 2010 / 2:48 PM / 7 years ago

CANADA STOCKS-TSX edges higher as commodities rally

3 Min Read

* TSX up 14.03 points at 12,584.58

* Six of 10 main sectors stronger

* Potash, Encana drag (Adds details, commentary)

By Claire Sibonney

TORONTO, Oct 20 (Reuters) - Toronto's main stock index was little changed on Wednesday morning as commodities rebounded, but weaker Potash Corp (POT.TO) and Encana Corp (ECA.TO) shares undermined the move higher.

Gold and base metal prices both rallied as investors reassessed the initial reaction to the China's surprise interest rate hike on Tuesday as overblown, and the greenback weakened, boosting U.S. dollar-denominated commodities and sending the materials sector up 0.5 percent.

Barrick Gold Corp (ABX.TO) added 0.2 percent to C$47.01 and Teck Resources TCKb.TO gained 1.6 percent to C$44.61.

"Yesterday's moves were quite dramatic so a little bounce off the open is quite possible and that's exactly what we're seeing but we could have another leg down further on in the day," said Francis Campeau, a broker at MF Global Canada, in Montreal.

"To say that yesterday's move is completely forgotten, I doubt it ... China has been fueling all the growth and if they're putting on the brakes, it will show."

Campeau noted that gold shares in particular have been volatile and that Canadian investors on Tuesday were shifting asset allocation from golds to financials.

"We've seen a lot of profit-taking ... perhaps some bottom pickers going back into the golds."

At 10:27 a.m. (1427 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 14.03 points, or 0.1 percent, at 12,584.58. Six of its 10 main sectors were stronger.

Dragging on the TSX, however, were big names such as Potash Corp, which fell 1.2 percent to C$146.70, after the province of Saskatchewan said it opposed BHP Billiton's (BLT.L) hostile $39 billion bid for the world's largest fertilizer producer. [ID:nSGE69J05K]

Encana dropped almost 2 percent to C$29.57 after the country's largest natural-gas producer reported third-quarter profit below market expectations, cut its 2010 production outlook and lowered its forecast for cash flow per share. [ID:nSGE69J0FK]

$1=$1.03 Canadian Reporting by Claire Sibonney; editing by Rob Wilson

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