TORONTO (Reuters) - Canada’s benchmark stock index rose to a one-week high on Wednesday as mining and energy shares got a boost on signs major central banks might act to resuscitate a slowing global economy.
The Toronto market followed global equities higher as a Federal Reserve official sounded more inclined to consider further help for the U.S. economy, while the European Central Bank left rates unchanged and its president, Mario Draghi, suggested near-term action was unlikely.
But some investors interpreted his comment that risks to the economy had grown as a sign of possible future action by the ECB.
The heavily-weighted energy, financials and mining issues pushed the index higher as the price of oil, gold and copper edged higher.
Big names on the upside included Suncor Energy, up 3.3 percent at C$29.24, and Cenovus rose 5.2 percent to C$32.47. Potash Corp was up 1.1 percent at C$40.11 and Teck Resources rose 2.9 percent to C$32.31.
“There is some growing belief that we might get more action from the U.S. Fed in conjunction with the fact that there are some signs that possibly there might be a bit of progress coming out of the situation to address the turmoil going on in Europe,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.
“It’s partly a deep-breath rally to some extent. That things aren’t coming to an end like many might have thought last week.”
The Toronto Stock Exchange’s S&P/TSX composite index ended the day up 125.69 points, or 1.1 percent, at 11,633.40, with eight of its 10 subsectors higher. The index hit a high of 11,686.99, its strongest since May 29.
Irwin Michael, portfolio manager at ABC Funds, said the market had been oversold.
“The markets will overshoot and undershoot. In this particular incidence we think the market overshot on the downside,” he said.
“There’s been so much negativity baked into the stock market that it didn’t take very much, say, if things go from bad to less bad — that degree of improvement will obviously affect stock prices.”
The market pared gains on weakness in gold miners, even as the price of bullion ticked higher.
Barrick Gold, was the most influential stock on the downside and skidded 5 percent to C$41.53. The world’s largest gold miner ousted Aaron Regent as chief executive, saying it was frustrated that its stock has languished since he took the helm three years ago while bullion prices have surged.
“That’s not a reason for his firing that’s justifiable,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
“They have a right to be disappointed. We’re all disappointed. Anybody who has invested in any resource stock should be disappointed. Over the past three years they’ve done nothing for you.
Goldcorp fell 1.2 percent to C$41.30, while Kinross Gold sank 2.1 percent to C$8.84.
Elsewhere, a subsidiary of Laurentian Bank of Canada said on Wednesday it will acquire AGF Trust Co from mutual fund company AGF Management for C$415.5 million in a deal that will expand its lending capacity. Laurentian shares were up 2.7 percent to C$42.35 and AGF stock was up 4.4 percent at C$12.24.
Additional reporting by Jon Cook; Editing by Diane Craft