TSX perks up as oils, base metals rally

Wed Mar 17, 2010 5:40pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Toronto's main stock index closed higher on Wednesday, hitting its highest point since September 2008 earlier in the day, as commodity prices rose after the U.S. Federal Reserve's renewed pledge to keep interest rates low for an extended period.

Energy producers led the gains as oil rose toward $83 a barrel, supported by a weaker U.S. dollar and higher demand in the United States, while OPEC decided to leave output targets unchanged.

Suncor Energy (SU.TO: Quote), Canada's biggest oil company, rose 2.4 percent to C$32.12, while Canadian Natural Resources (CNQ.TO: Quote) added almost 1 percent at C$74.69.

"As long as the Fed is keeping interest rates low, it's making everyone quite comfortable in terms of having cheap money out there," said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management in Vancouver.

Solid base metal prices boosted the mining sub-sector, with Teck Resources TCKb.TO ahead 1.2 percent at C$41.97 and Ivanhoe Mines (IVN.TO: Quote) adding almost 2 percent at C$16.68.

Offsetting those gains, however, gold miners were down 0.4 percent on softer bullion prices, helping drag down the broader materials sector 0.28 percent.

Financials also retreated on uncertainty over proposed, stricter banking regulation in the United States. Toronto-Dominion Bank (TD.TO: Quote) fell 0.6 percent to C$74.54, while Royal Bank of Canada <RY.TO, the country's biggest bank, was unchanged at C$59.46. Both banks have large U.S. operations.

"I think what you're seeing is not only potentially the Volcker rule coming in but potentially tempering a bit of risk-taking for a lot of banks and I think that's probably being taken as negative," added Zohny.   Continued...

<p>People walk by a sign displaying TSX information in Toronto, August 17, 2009. REUTERS/Mark Blinch</p>