CANADA STOCKS-TSX drives to 2-year high as commodities rally

Wed Sep 29, 2010 5:15pm EDT
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   * TSX closes at 12,382.82, highest level since Sept 2008
 * Energy, banks, materials, tech shares rise
 (Updates to close)
 By Claire Sibonney
 TORONTO, Sept 29 (Reuters) - Toronto's main stock index
climbed to its highest level in two years on Wednesday, pushed
up by rising commodity prices and a firm banking sector.
 The index closed at 12,382.82, the day's high, up 0.85
percent and its highest level since September 2008. Its
previous 2010 high was reached in late April.
 The TSX index stumbled early in the day, but robust
manufacturing data from China, a broadly weaker U.S. dollar and
a drop in oil in storage in the United States drove up
commodity prices and associated share prices.
 Oil rose 2 percent and copper jumped to more than a
two-year high. [O/R] [MET/L]
 "What's driven the market over the last number of years has
been clearly the materials area," said Don Reed, president and
chief executive of Franklin Templeton Investments.
 "Also, we have the best banking system in the world. Banks
sustained everything through the downturn because we weren't
stuck with a lot of subprime loans."
 Reed added that infrastructure growth in emerging economies
such as China -- and low interest rates to support new projects
-- should continue to drive the Canadian market higher as long
as commodity prices sustain themselves.
  "The TSX is not cheap, but it still does have some room to
move higher. The cautionary note is that nothing goes up in
straight line and we will continue to see volatile markets here
and other places around the world."
  The TSX still has more than 15 percent to go to reach the
peak above 15,000, which it hit in June 2008, Reed noted.
  All three of the TSX's most heavily weighted groups put in
solid performances. The energy sector was up 2 percent,
financials, up 0.4 percent, and materials, up 0.4 percent.
 Heavyweight gainers included oil company Canadian Natural
Resources (CNQ.TO: Quote), up 2.8 percent at C$35.53, miner Teck
Resources TCKb.TO which added 1.6 percent to C$41.97, and
Bank of Nova Scotia (BNS.TO: Quote), which advanced 1.2 percent to
 Gold extended its record-breaking rally, rising above
$1,310 an ounce while silver hit a 30-year high as the
greenback weakened on expectations of more U.S. monetary
easing. [GOL/]
 Barrick Gold Corp (ABX.TO: Quote), the world's No. 1 producer,
rose 0.6 percent to C$48.57, and Silver Wheaton SLW.TO added
1.1 percent to C$27.92.
 Market watchers also pointed to fund managers and large
institutional investors adding to their portfolios before the
end of the month and quarter on Thursday as another factor in
the market's rise.
 Ron Meisels, technical analyst and president of Phases &
Cycles, said this helped the market break through the April
high, a key technical resistance level.
 "The only thing we have to be careful of is that today is
the penultimate day of the month," Meisels said, noting that
profit-taking on Friday and Monday at the beginning of October
could cut some of the gains.
 Among the gainers, technology stocks advanced 2.3 percent
as Research In Motion RIM.TO jumped 3.4 percent to C$50.04,
following the introduction this week of the BlackBerry
Playbook. [ID:nN2871674]
($1=$1.03 Canadian)
 (Reporting by Claire Sibonney; editing by Peter Galloway)