CANADA STOCKS-Energy, financials lift TSX to 2-week high as mood improves

Mon Jul 8, 2013 5:16pm EDT
 
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* TSX rises 73.96 points, or 0.61 percent, to 12,208.87
    * Eight of 10 main index sectors advance
    * Manulife jumps to play market's biggest influence
    * Gold miners decline 1.5 percent despite bullion gains

    By John Tilak
    TORONTO, July 8 (Reuters) - Canada's main stock index hit a
two-week high on Monday, led by higher energy and financial
stocks, as optimism about the economic recovery gained momentum
after Friday's U.S. jobs data and hopes for the upcoming
earnings season lifted sentiment.
    The market set its sights on the U.S. second-quarter
earnings season, which kicked off with Alcoa Inc results
after the closing bell on Monday, as well as the Canadian
reporting season which picks up later this month.
    A U.S. monthly jobs report on Friday showed
better-than-expected growth in June and raised expectations that
the U.S. Federal Reserve will start to dial back its stimulus
program this year, reflecting growing strength in the world's
largest economy.
    "We are in a situation where we need to keep seeing evidence
of U.S. growth, but investors also have this massive overhang of
the Fed potentially tapering as soon as September," said Elvis
Picardo, strategist and vice president of research at Global
Securities in Vancouver.
    "With the rates still at record lows, investors continue to
gravitate towards sectors that have above-average yields," he
added. "The Fed is a long way from tightening monetary policy,"
he said.
    The utilities sector, one of the groups most badly hit by a
spike in bond yields in recent weeks, rose more than any other
major sector, climbing nearly 3 percent. 
    "Investors are coming around to the view that the selloff
was overdone," Picardo said. "Given how attractive the yields on
the sector still are, it's not surprising to see investors get
back in."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 73.96 points, or 0.61 percent, at 12,208.87,
after earlier touching 12,219.84 -its highest since June 20.
    Eight of the 10 main sectors on the index were higher.
    Despite Monday's gains, the benchmark Canadian index is down
about 1.8 percent since the start of the year.
    "There hasn't been much evidence of sentiment changing for
Canadian equities," said Gavin Graham, chief strategy officer at
Integris Pension Management Corp. He says the TSX is being
weighed down in particular by the weak performance of gold
stocks, which are down about 46 percent this year.
    "People don't need the disaster insurance of gold if the
economy is picking up," Graham said. "You have people selling
off gold as the economy gets better."
    The bullion was up after a two-day sell-off. 
    But gold-mining shares fell 1.5 percent in choppy trade,
dragging the materials group into the red.
    Goldcorp Inc was down 2.2 percent at C$24.91; but
Barrick Gold Corp, which hit a 21-year low in the
previous session, rose 0.1 percent to C$14.58.
    Financials, the index's most heavily weighted sector, added
0.8 percent.
    Insurer Manulife Financial Corp jumped 3.4 percent
to C$17.89 and had the biggest positive influence on the index.
Royal Bank of Canada climbed 0.5 percent to C$61.16.
    Energy shares were up almost 1 percent and played the
biggest role of any single sector in pushing the market higher.
    Suncor Energy Inc gained 1.5 percent to C$31.60, and
TransCanada Corp advanced 1.8 percent to C$46.41.
    Investors also paid attention to BlackBerry as the
smartphone maker's annual general meeting will take place on
Tuesday. The stock edged higher.