Bank rally helps pull Toronto stocks higher

Thu Mar 20, 2008 6:56pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index ended a volatile session higher on Thursday, as financials were buoyed by Bank of Montreal's (BMO.TO: Quote) deal to restructure two of its commercial paper trusts.

The rally in the banking sector helped the benchmark overcome earlier sharp declines, as it was dragged down by resource issues that were shaken by retreating commodity prices.

Bank of Montreal (BMO.TO: Quote) jumped C$2.41, or 5.7 percent, to C$44.51 after it said late on Wednesday it had come to an agreement with counterparties and investors to restructure its Apex and Sitka commercial paper trusts.

The bank's shares have been battered by concern over its exposure to investments hurt by the credit crunch and fears that further writedowns will be needed.

The sector as a whole gained 2.1 percent, as Canadian Imperial Bank of Commerce (CM.TO: Quote) rose C$4.09, or 6.8 percent, to C$64.26 and National Bank of Canada (NA.TO: Quote) was up C$3.18, or 7.1 percent, at C$48.18.

"BMO set the tone and it may be that they've put a finger in the dike at least," said John Kinsey, portfolio manager at Caldwell Securities Ltd.

"In our case it was really the ABCPs that were the problem, more so than any of the subprime or the derivatives (problems in the United States)," said Kinsey. "If indeed that is the case, we may be 90 percent there to remedying the situation and that obviously would be good for Canada."

The S&P/TSX composite index .GSPTSE closed up 66.26 points, or 0.52 percent, at 12,775.64 with six of its 10 main groups higher.   Continued...

<p>An outdoor Bay Street stock ticker showing the TSX closing quote of 13,040, down 364 points, in Toronto, February 27, 2007. REUTERS/J.P. Moczulski</p>