TSX surges on central bank optimism, Potash

Thu Jul 23, 2009 7:46pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - A declaration by the Bank of Canada that the country's recession is almost over helped propel Toronto's main stock index to its highest level in nearly six weeks on Thursday.

The central bank said Canada will pull out of recession during this quarter and also that the world economy has likely averted a worst-case scenario and is bottoming out.

"They seem to think the worst is behind us and perhaps better times are ahead. The market usually anticipates the economy four to five months ahead," said Bruce Latimer, a trader at Dundee Securities.

Firm oil and metals prices also encouraged big gains in the index's resource sectors, with the energy group advancing 2.94 percent and the materials group rising 2.25 percent.

Top gainer Potash Corp shot 7.27 percent higher to C$104.59 as the fertilizer producer announced that Canpotex, the marketing unit for Potash, Mosaic Co and Agrium Inc, will sell potash to India at $460 a metric ton.

That lifted a market mood that had been sour on the outlook for global fertilizer prices, spurring investors to look past Potash's almost 80 percent drop in second-quarter profit and its cut in its full year financial forecast.

The financial sector, which accounts for about a third of the TSX index, jumped 2.83 percent, boosted by the Bank of Canada's assessment and by better than expected corporate earnings in the United States.

"The way I look at it is that all of a sudden people...will stop saying the glass is half empty. It's half full," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.   Continued...