Financials push TSX higher ahead of budget
By Ka Yan Ng
TORONTO (Reuters) - Toronto's main stock index finished more than 1 percent higher on Tuesday as optimism ahead of Canada's budget boosted financial shares and overcame a drag from commodities groups.
Banks and insurers dominated the gainers. Royal Bank of Canada (RY.TO: Quote) was up 3.9 percent at C$30.66, while Manulife MFC.TO gained 6 percent to C$21.40.
The sector rose 3.88 percent, partly on hopes that the federal budget, released after market close, would contain measures to ensure stability in the financial system.
"Keeping the economy from going into severe recession is going to limit their loan losses. If the recession is milder and shallower as a result of this fiscal stimulus then obviously the banks aren't going to lose as much money on credit card loans or commercial loans or personal lines of credit," said Tim Burt, president and chief investment officer at Cardinal Capital Management Inc in Winnipeg, Manitoba.
In the budget document, the government said it would seek to bolster the financial system and improve access to financing by committing C$50 billion more to a program that buys insured mortgages. It will also give itself the authority to inject capital into banks and financial firms that need support.
The government, which had leaked an unprecedented amount of detail about the package in the days leading up to Tuesday's release, now awaits reaction from the main opposition Liberals. The budget is expected to win opposition support, which would ensure the survival of the minority Conservative government.
"The big issue is not so much the budget itself, it's more is it good enough to allow the government to survive here," said Levente Mady, a broker at MF Global Canada, in Vancouver.
The S&P/TSX composite index .GSPTSE closed up 1.2 percent, or 103.12 points, at 8,759.63. The blue chip S&P/TSX 60 index .TSE60 closed 1.42 percent higher. Continued...