TSX jumps to near 2-month high on Europe deal

Thu Oct 27, 2011 5:25pm EDT
 
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By Jon Cook

TORONTO (Reuters) - Canadian stocks soared more than 2 percent on Thursday to their highest level in nearly two months, buoyed by optimism over a long-awaited deal by European leaders to tackle the euro-zone debt crisis.

The agreement included a plan to leverage the euro zone's bailout fund to 1 trillion euros, a 50 percent haircut for private holders of Greek debt and bank recapitalization.

While the news was cheered by the markets, analysts were guarded about the sustainability of the rally.

"There's a lot of hard sledding yet to go and the devil is always in the details, but the broad outline of this is pretty positive," said Robert Gorman, chief portfolio strategist at TD Waterhouse. "I'm sure we'll have some backing and filling here, but I suspect we will move higher."

Financial stocks, up 2.8 percent, played the biggest role in leading the market higher. Canadian banks have traded in sympathy with European lenders for much of the crisis even though they have little or no exposure to Greece.

Royal Bank of Canada (RY.TO: Quote) did the most to lead the financial sector higher, posting a 3.1 percent gain to C$49.66.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 279.38 points, or 2.3 percent, at 12,465.44, its biggest one-day gain in more than two weeks. The session high was 12,526.29, its highest level since September 9.

Energy stocks, up 3 percent, were also a major driver. Oil rallied more than 4 percent as the European deal and supportive U.S. data eased concerns that economic weakness could curb energy demand.   Continued...

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