August 16, 2012 / 12:12 PM / 6 years ago

Barrick, miners push TSX to three-month high

TORONTO (Reuters) - Canada’s main stock index rose above the 12,000 level for the first time since early May on Thursday as mining shares rallied on fresh stimulus hopes and after Barrick Gold (ABX.TO) said it is in talks to sell a majority stake in its African unit.

A sign shows TSX information in Toronto September 15, 2008. REUTERS/Mark Blinch (CANADA)

The push above the psychological 12,000 barrier was significant, investors said.

“It’s crucial for two reasons,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. “It has been a resistance level in the past and it also coincides with the index’s 200-day moving average.”

“The fact that it’s broken through 12,000 is promising, but we need to see if it’s sustainable,” he added.

Barrick was among the index’s top gainers, climbing 3.9 percent to C$35.60, after the world’s largest gold miner confirmed it is in talks to sell a majority stake in its African unit to China National Gold Group.

Adding to the gold group’s luster, prices for bullion rebounded from two straight losing sessions after prominent hedge fund managers, including John Paulson and George Soros, raised their stakes in the No. 1 gold exchange-traded fund, SPDR Gold Trust, in the second quarter. <GOL/>

Other top mining stocks that gained included Goldcorp Inc (G.TO), up 4.7 percent at C$37.93, and Potash Corp POT.TO, which rose 1.6 percent to C$43.99.

“We’ve had a lot of bad news over the last few months and the market has not fallen apart,” said Irwin Michael, portfolio manager at ABC Funds. “The bottom line is the market is feeling better.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE added 1.1 percent, or 127.14 points, to close at 12,032.58, its highest level since May 3.

The heavily weighted materials sector, which includes miners, led the way, jumping 3 percent.

Commodities were also buoyed by remarks from German Chancellor Angela Merkel that were viewed as supportive of further stimulus moves from the European Central Bank. On a visit with Canadian Prime Minister Stephen Harper on Thursday, Merkel voiced support for ECB President Mario Draghi’s crisis-fighting strategy.

“What happens in Europe will affect us in North America,” said Michael. “The powers that be at various central banks have to realize that no man is an island and we’re going to have to fix the problems at whatever cost it may be.”

Canada’s energy subindex rose 1.2 percent, led by Canadian Natural Resources (CNQ.TO), which gained 2.4 percent to C$31.55.

Investors were also focused on expectations for economic stimulus in China after Premier Wen Jiabao said on Wednesday that the country, the world’s top consumer of refined copper, still faced headwinds despite cooling inflation.

Those expectations got another boost after China’s Commerce Ministry said that the trade outlook for 2012 was worsening.

($1=$0.99 Canadian)

Additional reporting by Claire Sibonney and Alastair Sharp; Editing by Kenneth Barry and Leslie Adler

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