CANADA STOCKS-Fed-fueled rally lifts TSX to 1-month high

Thu Jul 11, 2013 5:24pm EDT
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* TSX rises 186.33 points, or 1.51 percent, to 12,493.26
    * All of 10 main index sectors advance
    * Index turns positive on year
    * Gold-mining stocks jump 6.6 percent
    * Barrick, Goldcorp surge to have major impact on market

    By John Tilak
    TORONTO, July 11 (Reuters) - Canada's main stock index
recorded one of its biggest jumps of the year on Thursday,
hitting a one-month high after Federal Reserve Chairman Ben
Bernanke calmed market fears when he reiterated support for the
U.S. central bank's stimulus program.
    The rally sparked gains across every major sector and helped
the Toronto market, up for a fourth straight session, turn
positive on the year.
    Gold producers showed the sharpest gain, climbing 6.6
percent. Barrick Gold Corp was up 7.9 percent and
Goldcorp Inc rose 7.3 percent, with the two having a
major influence on the index's rise. 
    Bernanke said on Wednesday the Fed must keep a stimulative
monetary policy in place due to weak to inflation levels and a
high unemployment rate. 
    "Bernanke went out of his way to assuage the market's
concerns," said Elvis Picardo, strategist and vice president of
research at Global Securities in Vancouver. "Sure, the Fed is
going to taper at some point, but just not yet."
    "This is a relief rally," he added. "Does it have the
potential to ride up even higher in the short term? I think it
    Markets are overreacting today, said Peter Westaway, chief
economist at Vanguard Asset Management Ltd, a unit of Vanguard
Group Inc, which manages over $2.4 trillion in assets.
    "The market has perhaps got a little bit overexcited about
what the Fed said," Westaway said. "I'm slightly surprised quite
how much the market has taken it as a signal that policy is
going to be looser for much longer."
     The Toronto Stock Exchange's S&P/TSX composite index
 was up 186.33 points, or 1.51 percent, at 12,493.26,
after reaching 12,496.29, its highest in more than a month.
    "As the market moves higher, the non-believers start jumping
in, and that's what you need for market momentum," Picardo said.
"It's an encouraging sign for the TSX."
    All of the 10 main sectors on the index were higher.
    The materials sector, which includes mining stocks, gained
4.6 percent, helped by the advances in gold-mining stocks. The
bullion price rose 1.3 percent to a near three-week high. 
    Financials, the index's most heavily weighted sector, were
up 0.9 percent. Royal Bank of Canada, the country's
biggest lender, climbed 0.6 percent to C$61.62, and Bank of
Montreal rose 1.1 percent to C$62.87.
    Energy shares were up 1.5 percent. Suncor Energy Inc 
rose 2.6 percent to C$32.97, and Canadian Natural Resources Ltd
 advanced 1.9 percent to C$33.29.
    Vanguard's Westaway said the aggressively accommodative
policies that global central banks have adopted have taken
markets into uncharted territory. "There's no track record for
markets to fall back on. There's no playbook for policymakers to
look at."
    "Overall, the global economy is on the mend, but there are
still downside risks," he added, saying he sees a gradual
stimulus rollback. "I don't think investors can sleep easy."