Resource rally fuels TSX to 28-month high

Tue Jan 18, 2011 5:13pm EST
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By Ka Yan Ng

TORONTO (Reuters) - Toronto's main stock index shot to its highest point since early September 2008 on Tuesday, fueled by rallying resource issues and by a rise in financials sparked by the Bank of Canada's decision to hold interest rates steady.

Most of the top gainers were resource issues, which drew support from firmer prices for gold, silver, copper and palladium. The index's materials and oil and gas groups each posted advances greater than 1 percent.

"Some of this is on the tailwind of a weaker U.S. dollar, stronger commodity prices, and this is helping the Canadian equity markets," said John Kurgan, senior market strategist at Lind-Waldock.

Teck Resources climbed 3 percent to C$63.84, while Barrick Gold Corp advanced 1.98 percent to C$47.81.

The price of oil, however, was a key resource that lost ground on Tuesday. But investors largely took the modest decline in the crude price in stride. Suncor Energy rose 1.57 percent to C$38.79, and Canadian Natural Resources climbed 1.78 percent to C$42.40.

"Maybe it might be of a little concern, as a commodities trader, that crude oil is down where most other commodities are up with a weaker U.S. dollar," Kurgan said. "It might be a little bit of a red flag. But oil is still trading north of $90. People are looking well past (today's decline)."

The Toronto Stock Exchange's S&P/TSX composite index finished up 119.09 points, or 0.89 percent, at 13,559.20.

The market rallied toward the session's end and finished just off the day's high of 13,565.62, which was its highest level since September 2, 2008.   Continued...