TORONTO (Reuters) - Rallying financial issues helped pull the Toronto Stock Exchange’s main index strongly higher on Monday, amid increased confidence in the value of bank stocks and a rush of bargain-hunting.
A sweetened bid for U.S. bank Bear Stearns Cos from JPMorgan Chase & Co improved sentiment for the broader financial sector as investors scooped up bank stocks that had been beaten down by fallout from the credit crisis and fears of more difficulties to come.
Canadian Imperial Bank of Commerce was up C$2.54, or 4 percent, at C$66.80, while Bank of Montreal added C$2.25, or 5.1 percent, to C$46.76.
The sector as a whole gained 3 percent after JPMorgan raised its Bear Stearns bid to about $10 a share from the $2 a share it had originally offered.
Elvis Picardo, investment strategist at Northern Securities Inc. in Vancouver, said the move was a positive step for the banking sector and helped ease concerns that financial stocks on both sides of the border were overvalued.
“Just the fact that JPMorgan has seen fit to quadruple the bid provides some comfort to investors that the degree of overvaluation may not be that huge for the financial services industry,” said Picardo.
The S&P/TSX composite index closed up 244.08 points, or 1.91 percent, at 13,019.72 with all of its 10 main sectors higher.
Stronger resource issues also helped lift the benchmark, as the sector bounced back from sharp declines last week amid a selloff in commodities.
In the resource-laden materials group, Potash Corp of Saskatchewan surged C$6.44, or 4.4 percent, to C$154.01 and Inmet Mining was up C$1.28, or 1.7 percent, at C$76.60. Overall, the group was up 0.7 percent.
The energy sector gained 0.8 percent, with Petro-Canada up 64 Canadian cents, or 1.5 percent, at C$43.41 and Canadian Natural Resources ahead 84 Canadian cents, or 1.3 percent, at C$67.25.
The tech sector climbed 4.2 percent, supported by Research In Motion as the BlackBerry maker rose C$7.03, or 6.6 percent, to C$114.10.
On the downside, the subindex of gold producers gave up 1.6 percent with the price of bullion lower. Agnico-Eagle Mines was off C$1.64, or 2.4 percent, at C$67.44 and Kinross Gold dipped 89 Canadian cents, or 4 percent, to
Monday was the first time in nearly four weeks that the TSX has marked two consecutive sessions of gains, while March has been punctuated by large triple-digit swings to both sides.
John Ing, president of Maison Placements Canada, said the market has been moving on day-to-day developments and that Monday’s big gain may not hold.
“(The) caution, however, is that these rallies tend to be very short because we are definitely not out of the woods,” Ing said.
Market volume was 352 million shares worth C$6.6 billion. Advancers outpaced decliners 1,033 to 542. The blue chip S&P/TSX 60 index closed up 14.65 points, or 1.95 percent, at 765.56.
In New York, the sweetened bid for Bear Stearns also buoyed stocks, as did data that spurred hopes of a recovery in the struggling U.S. housing market.
The Dow Jones industrial average closed up 187.32 points, or 1.5 percent, at 12,548.64, and the Nasdaq composite index rose 68.64 points, or 3 percent, to 2,326.75.
Editing by Rob Wilson