CANADA STOCKS-TSX jumps on optimism over possible U.S. debt deal

Thu Oct 10, 2013 10:55am EDT
 
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* TSX at 129.91 points, or 1.02 percent, at 12,859.25
    * Potential for break in U.S. impasse boosts equities
    * Canadian Natural Resources up 3 pct after Horizon update

    By Alastair Sharp
    TORONTO, Oct 10 (Reuters) - The main Canadian stock index
jumped in early trading on Thursday as investors bet U.S.
lawmakers would reach agreement to avoid a potentially
calamitous debt default.
    The Toronto Stock Exchange's S&P/TSX composite index
 gained more than 1 percent, matching similar jumps in
the three main U.S. indices, in a broad-based rally led by
financial and energy stocks.
    House Republicans are considering agreeing to a short-term
increase in the government's borrowing authority, according to a
Republican leadership aide, keeping a possible default after
Oct. 17 at bay and buying time for negotiations on broader
policy measures. 
    A debt default by the United States, the world's biggest
borrower and Canada's top trading partner, would roil world
markets, raise borrowing costs, hurt the dollar and throw U.S.
and world economies into a recession. 
    "People feel the Republicans will cave, which I'm sure they
will, as we get closer and closer to the 17th," said Paul
Harris, portfolio manager at Avenue Investment Management. 
    "The Republicans are not going to want to be the party that
puts the United States into default."
    A debt default by the United States, the world's biggest
borrower, would roil world markets, raise borrowing costs, hurt
the dollar and throw U.S. and world economies into a recession. 
    The Canadian index was up 129.91 points, or 1.02 percent, at
12,859.25 by mid-morning.
    The single biggest positive impact came from Canadian
Natural Resources Ltd, which jumped 3 percent to
C$32.98 after saying its Horizon oil sands project would likely
be under budget. 
    Three banks were among the top five performers, with Royal
Bank of Canada up 1 percent at C$67.05, Toronto-Dominion
Bank gaining 0.9 percent at C$91.86, and Bank of Nova
Scotia adding 0.9 percent to C$59.48.