TSX rises on strong oil as focus shifts to Fed

Mon Aug 9, 2010 4:39pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Toronto's main stock index rose on Monday as strong oil prices pushed up its energy sector and investors showed optimism that the U.S. Federal Reserve will signal steps to boost economic recovery.

The energy sector was up 0.6 percent as oil prices rose above $81 a barrel, helped in part by expectations the U.S. central bank may signal its readiness to print more money to support the economy. Canadian Natural Resources rose 1 percent to C$36.85.

"Canada is regarded, thanks to its big resource exposure, as a play on global growth and people are expecting there will be quantitative easing (by the Fed) or at least some indication that's the direction they're heading in," said Gavin Graham, global strategist at Excel Funds Management Inc.

The Toronto Stock Exchange's S&P/TSX composite index finished the session up 63.59 points, or 0.54 percent, at 11,863.56, with nine of its 10 main sectors higher. The small utilities sector sank 0.2 percent.

Financial shares were boosted by "feel good economic stories" such as figures released on Monday by McDonald's Corp [ID:nN09255018], said Bob Gorman, chief portfolio strategist at TD Waterhouse.

"McDonald's same store sales in July were up 7 percent. Macdonald's tends to be looked upon as a bit of a bellwether consumer stock," he said.

Gorman also said there was general optimism that Canadian banks will report healthy results for their fiscal third quarter.

"The Canadian financials, in particular the banks, are quite strong today. I think apart from this general positive sentiment in the market today you've got anticipating about Q3 earnings," he said. Bank results are due later this month.   Continued...

<p>People walk by a Bay Street sign at the financial district in Toronto in this October 10, 2008 file photo. REUTERS/Mark Blinch</p>