TORONTO (Reuters) - Toronto’s main stock index ended at its highest point since September 2008 on Tuesday, aided by stronger commodity prices and a renewed pledge by the U.S. Federal Reserve to keep interest rates very low for an extended period.
The index’s materials sector led the way, rising 1.5 percent, with First Quantum Minerals up 3.5 percent at C$91.28 after the miner’s quarterly results beat analysts’ expectations.
Agnico-Eagle rose 2.6 percent to C$60.68, and Barrick Gold was up 1.9 percent at 40.64.
The price of gold was up 2 percent on the day.
“The trend has been sideways on gold for a while, and people are coming around to the opinion that that metal is inevitably poised to move higher in the months ahead, whether it’s on currency debasement, or the renewed decline in the U.S. dollar,” said Elvis Picardo, an analyst and strategist at Global Securities in Vancouver.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 80.60 points, or 0.67 percent, at 12,089.40. It was the index’s highest close since September 26, 2008.
The market had been moderately higher all day, but it extended its gains after the U.S. Federal Reserve again promised to keep rates at near zero for an extended period.
Resource issues rose on the statement, with oil jumping 2.4 percent as the U.S. dollar fell after the Fed decision.
Financial issues also benefited, said Levente Mady, a market strategist at Union Securities in Vancouver.
“Short-term rates are going to continue to stay very low, and with the positive yield curve, basically what the banks are doing is borrowing short -- literally at zero percent -- and lending long and making 4 or 5 percent or maybe even more,” he said.
“As long we continue to have a very, very steep yield curve, I think that’s going to continue to add fuel to the fire and pressure markets higher.”
The heavily weighted financial sector was up 1 percent, with Toronto-Dominion Bank up 2.3 percent at C$75.01 and Bank of Montreal up 1.1 percent at C$61.04.
Elsewhere, Domtar Corp rose 5.7 percent to C$67.99 after Goldman Sachs raised the forestry firm to “buy” from “neutral,” and added the company to its Americas “conviction buy” list.
On the downside, shares in WestJet Airlines Ltd fell 4 percent to C$13.31 after the surprise resignation of its chief executive rattled investors already edgy after a rough year for Canada’s No. 2 carrier.
Additional reporting by Jennifer Kwan; editing by Rob Wilson