TORONTO (Reuters) - Canadian stocks enjoyed the biggest single-day jump in nearly six weeks on Tuesday as resource and financial shares rallied on global growth hopes.
Investors were cheered by strong U.S. data, reports China plans to boost growth and speculation euro zone leaders may agree to issue common bonds as a way of tackling the region’s debt crisis.
The trifecta of positive news was welcomed by Canada’s reeling main stock index, which has fallen more than 7 percent in May on a cocktail of worsening euro zone conditions and weak data from the United States and China.
On Tuesday, Canadian stocks significantly outperformed their U.S. counterparts, which were flat after a big gain on Monday when Canadian markets were closed for the Victoria Day holiday.
“The Canadian marketplace is the beta bet on a global scale,” said Pat McHugh, Canadian equity strategist at Manulife Asset Management. “So if people are feeling good about the global economy, Canada should outperform the U.S.”
Nearly all of Canada’s 10 main sectors were higher, led by heavyweight energy, up 2.5 percent, and materials, which climbed 1.7 percent.
The most influential resource gainers included Suncor Energy, up 3.3 percent at C$28.30, Canadian Natural Resources, which climbed 3.5 percent to C$31, Barrick Gold, rising 1.5 percent to C$38.45, Kinross Gold, up 4.3 percent to C$8.17, Royal Gold, up 7.2 percent to C$68.54, and Potash Corp, which rose 1.3 percent to C$39.98.
Metals prices, most notably copper, rebounded on reports that top metals consumer China will speed approval of infrastructure investments to combat slowing growth and a sluggish property sector.
Also boosting sentiment was U.S. data that showed home resales rose in April to their highest annual rate in nearly two years and a drop in foreclosures pushed prices higher, hopeful signs for the country’s economic recovery.
The Toronto Stock Exchange’s S&P/TSX composite index finished up 171.14 points, or 1.5 percent, at 11,451.78. It was its biggest single-day gain since April 12.
The TSX hit a session high at 11,534.20. However, gains were pared in the afternoon after Germany dismissed a French-led call for euro zone governments to issue common bonds, cooling hopes a day before a European Union summit that the meeting would produce fresh measures to tackle the region’s debt problems.
“There are an awful lot of people who believe that the ‘eurobond’ is the answer,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.
“Germany has opposed this because they’re afraid it would be a QE1 or QE2 kind of equivalent.”
Canadian financial shares still finished up 1 percent, led by the major banks. Toronto-Dominion Bank gained 1.2 percent to C$77.83, Royal Bank of Canada was up 0.9 percent at C$52.17 and Bank of Nova Scotia rose 1 percent to C$51.62.
Investors were looking ahead to Wednesday, when Bank of Montreal is the first of Canada’s six biggest banks to report its second-quarter earnings results.
“If the banks can pull something out of the hat then that might get us going, but expectations are pretty low,” said McHugh.
In other company news, shares of Niko Resources Ltd fell 1.4 percent to C$33.58 after the oil and gas producer said it will relinquish its 15-percent interest in the D4 block at the Mahanadi basin, off India’s east coast.
Editing by Kenneth Barry