TSX ends sharply higher as Potash soars
By Jennifer Kwan
TORONTO (Reuters) - Toronto's main stock index shot higher on Tuesday as Potash Corp soared after rejecting an unsolicited $38.6 billion takeover offer from BHP Billiton, raising the prospect of a higher bid and other takeover activity in the fertilizer sector.
Potash Corp of Saskatchewan, the world's biggest fertilizer company, said its board rejected BHP Billiton's offer as "grossly inadequate," and its shares finished the day up 26 percent at C$147.34.
Fellow fertilizer producer Agrium rose 3.5 percent to C$71.19, helping to boost the TSX materials sector by 4.3 percent.
"The price which BHP was seeking to pay was perceived as too low by the company and the market agrees with the company," said Francis Campeau, a broker at MF Global Canada in Montreal.
The Toronto Stock Exchange's S&P/TSX composite index finished the session up 175.88 points, or 1.52 percent, at 11,728.64. The Potash-driven rally helped to push the index to a peak of 11,744.84, its strongest level in nearly a week.
Bob Gorman, chief portfolio strategist at TD Waterhouse, said "where there's smoke there's fire", adding the market is now looking for a higher bid from BHP, or for other players to enter the fray. There's also the possibility of other merger and acquisition activity in the sector, he said.
Eight of the TSX's 10 main sectors were higher, with the energy group also supporting the resource-heavy index as oil rose toward $76 a barrel.
Oil broke a five-day retreat as U.S. earnings and industrial production figures eased worries about the economy. As well, a weak greenback made commodities such as oil cheaper for holders of other currencies. Continued...