CANADA STOCKS-TSX jumps 2 pct as euro zone optimism takes hold

Mon Sep 26, 2011 5:24pm EDT
 
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 * TSX rises 244.32 points, or 2.13 percent, to 11,707.19
 * Rebounds from 14-month low reached earlier in session
 * Nine of 10 sectors higher; banks, energy drive gains
 (Adds details, comments)
 By Trish Nixon
 TORONTO, Sept 26 (Reuters) - Toronto's main stock index
jumped more than 2 percent on Monday, bouncing back from a
14-month low, as hopes European leaders will commit more cash
to bail out debt-laden euro-zone nations revived risk appetite.
 European officials are working on ways to magnify the
financial firepower of the euro zone's rescue fund to fight the
region's debt crisis more effectively, a senior European
Central Bank policymaker said. [ID:nLDE78P01H]
 But euro zone officials played down reports of nascent
plans to halve Greece's debts and recapitalize European banks,
saying no such plan is yet on the table.
 "There just seems to be a mood and nothing more than that,"
said Michael Smedley, chief portfolio manager at Morgan Meighen
& Associates.
 "There are no new panic factors occurring, no particular
stress in the market, and a slight suggestion that there will
be a reason to look more warmly on the European situation -
though there seems no tangible evidence of that."
 The index's economically sensitive financials group jumped
3.2 percent. Royal Bank of Canada RY.TO was the most heavily
weighted advancer, up 4.1 percent at C$47.98, while
Toronto-Dominion Bank TD.TO gained 4.1 percent to C$73.85.
 "Just like in 2008, the financial group is the focal point
for the current state of events," said Elvis Picardo,
strategist and vice president of research at Global Securities
in Vancouver.
 "As far as the Canadian banks are concerned there is more
optimism on that front because they came out of the last crisis
in really good shape," he added.
 After a volatile session, the Toronto Stock Exchange's
S&P/TSX composite index .GSPTSE closed up 244.32 points, or
2.13 percent, at 11,707.19, with nine of its 10 sectors higher.
Earlier the index had fallen to 11,293.63, its weakest point
since July 2010.
 Markets have whipsawed for months over fears of European
debt contagion and hopes that officials will finally contain
the crisis. Last week the TSX tumbled almost 7 percent,
entering bear market territory.
 "We had a really steep selloff last week, and no dramatic
developments on the negative side over the weekend, so you're
seeing some of the fear abate today," Picardo said.
 "But the situation still remains extremely uncertain and I
think we could continue to see sentiment turn on a dime this
week." 
 Investors were unfazed by weak commodity prices. Energy
issues rose 3 percent, while oil traded flat. The index's
materials sector rallied 1.5 percent even as gold prices
tumbled 2 percent and copper entered its fourth down week.
[O/R] [MET/L]
 Suncor Energy SU.TO rose 5.1 percent to C$27.66, while
Barrick Gold ABX.TO was up 2.5 percent at C$48.94, and First
Quantum Minerals FM.TO surged 9 percent to C$14.95.
 Ivanhoe Mines IVN.TO was the index's heaviest decliner,
The Vancouver-based miner fell 9.2 percent to C$15.00 after
Mongolia said it plans to renegotiate a landmark deal to
develop the huge Oyu Tolgoi copper-gold project in southern
Mongolia. [S1E78P0AE]
 In other company news, shares of Intact Financial IFC.TO
jumped 4.4 percent to C$56.15 after the insurer closed its
C$2.6 billion ($2.5 billion) acquisition of the Canadian arm of
French insurance group AXA AXAF.PA. [L3E7KQ1BS]
 Acquisition-hungry Valeant Pharmaceuticals International
VRX.TO said it will raise its takeover offer for Afexa Life
Sciences FXA.TO to C$88 mln ($85 million), topping Paladin
Labs' hostile bid for the maker of Cold-FX flu medicine.
Afexa's stock jumped 14.7 percent to C$86, while Valeant rose 2
percent to C$40.16. [S1E78P0OX]
($1=$1.03 Canadian
 (Editing by Jeffrey Hodgson and Peter Galloway)