TORONTO (Reuters) - Canada’s main stock index advanced for the second straight day on Wednesday, rallying with gold and base-metal mining shares to dig itself out of an early hole as mounting fears about the euro zone economy and China rattled markets.
The index surged nearly 300 points, or 2.6 percent, after nearly hitting a 2012 low at 11,260.04 early on Wednesday as worries about Greece’s possible exit from the euro zone sparked a broad sell-off in equities.
The rebound was led by the gold mining subgroup, which jumped more than 4.5 percent, as a plunge in bullion near key technical support levels around $1,525 an ounce prompted buying of oversold gold stocks.
“Maybe now the sell-off has gone far enough and people are working out that gold does have some role as a traditional safe haven,” said Gavin Graham, president at Graham Investment Strategy. “With that being about 12 percent of the total TSX market capitalization, it helps.”
Gains were led by top gold producers Barrick Gold, up 5.5 percent at C$40.55, and Goldcorp Inc, which rose 7 percent to C$38.40.
Other gold miners were not as fortunate. Romarco Minerals plummeted almost 25 percent near a three-year low at $0.61 on Wednesday after the small cap miner said a federal wetland permit for its flagship gold project in South Carolina will take longer than it expected.
The Toronto Stock Exchange’s S&P/TSX composite index finished up 113.02 points, or 1 percent, at 11,564.80, its highest close in nearly two weeks.
It was the TSX’s first two-day upswing in more than three weeks and just its fifth positive session this month.
Base metals miners were led by Teck Resources, which rose nearly 5 percent to C$31.46, despite copper falling to a 4-1/2-month low.
“Investors are getting a jump on a group that has been fairly beaten down disproportionately in recent months,” said Elvis Picardo, strategist at Global Securities in Vancouver.
Energy shares also ended up 0.6 percent, even with U.S. crude coming precariously close to testing its $90 per barrel support. Suncor Energy rose 0.8 percent to C$28.53 and Canadian Natural Resources climbed 1.4 percent at C$31.45.
Resource firms initially slumped on Wednesday after the World Bank cut its economic growth forecast for China this year to 8.2 percent. Also weighing was a Reuters report that each euro zone country was being directed to prepare a contingency plan for the possibility of Greece’s leaving the bloc.
The 19-commodity Thomson Reuters-Jefferies CRB index - a global benchmark for the asset class - extended the 20-month lows of the previous session, falling 1.5 percent to a bottom not seen since September 2010.
“If you’ve got both Europe and China either in recession or slowing down, it’s difficult to be too enthusiastic about commodities which are regarded as a play on economic strength,” said Graham.
The weak global growth outlook overshadowed a strong start to the second-quarter earnings season by Canada’s top six banks.
Bank of Montreal shares rose 1.5 percent to C$56.06, after the country’s fourth largest lender reported its quarterly profit rose a stronger-than-expected 27 percent.
Overall, the influential financial group was up 0.6 percent, led by Toronto-Dominion Bank, which rose 1.2 percent to C$78.73. Royal Bank of Canada shares advanced 1.4 percent to C$52.90.
Editing by Andrew Hay