September 27, 2012 / 12:32 PM / in 5 years

TSX halts 5-day skid, underpinned by China, Spain

TORONTO (Reuters) - Canada’s main stock index jumped almost 1 percent on Thursday, breaking a five-day fall as investors bought back in to heavyweight resource and banking stocks after Spain displayed fiscal discipline and China’s central bank splashed cash.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

Nine of the index’s 10 main sectors moved higher, led by the heavyweight materials, energy and financial sectors, which together account for more than three-quarters of the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE.

The index finished up 105.99 points, or 0.87 percent, at 12,338.85, as stronger oil, gold and copper prices boosted energy and mining firms.

The materials group index, home to mining companies, jumped 1.87 percent. An index of energy stocks gained 1.21 percent, while an index of financial stocks rose 0.79 percent.

Goldcorp Inc (G.TO) led the rally as the biggest index mover and was up 2.55 percent to close at C$45.44. The miner was followed by the Bank of Nova Scotia (BNS.TO), which advanced 1.24 percent, to end at C$54.75, and Royal Bank of Canada (RY.TO), which was up 0.93 percent at C$56.69.

Gold and copper prices climbed higher on hopes of additional monetary stimulus from China, while fresh austerity steps in Spain renewed fears about the euro zone. <GOL/> <MET/L>

Spain announced a detailed timetable for economic reforms and a tough 2013 budget based mostly on spending cuts seen by many as an effort to pre-empt the likely conditions of an international bailout.

“This is one small pebble in a very large pile of rocks, but it is a glimmer of hope that some of the southern European countries can take the necessary steps in order to start reducing debt levels, or at a minimum, stop increasing debt,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis.

CHINA PUMPS IN THE CASH

Equity markets got an early boost overnight after China’s central bank injected 365 billion yuan ($58 billion) into money markets this week to prevent a short-term liquidity crunch at the country’s commercial banks.

“China is by far the biggest factor in determining commodity prices. Any news perceived as being positive for the Chinese economy tends to help commodity prices, and therefore the TSX,” said Elvis Picardo, a strategist at Global Securities in Vancouver, who has recommended clients buy lagging Canadian commodity stocks for several months.

The news from China offset data showing weak orders for manufactured goods in the United States, which dimmed the global recovery outlook.

Picardo warned that the TSX’s rise could simply be a reaction to a five-day sell-off, and that catalysts would be scarce until North American jobs data at the end of next week and the start of corporate earnings season soon after.

Still, a Reuters poll published on Wednesday showed Canadian shares are expected to make further gains this year and into the middle of 2013, as recent stimulus from major central banks is expected to lift lagging resource stocks. <EPOLL/CA>

Weighing on the index on Thursday, Enbridge Inc (ENB.TO) dipped 0.46 percent to C$38.69 after environmental groups sued the government over the pipeline company’s contentious Northern Gateway pipeline.

Research In Motion Ltd RIM.TO shares, which ended up 1.16 percent to finish at C$6.96 on the TSX, jumped 20 percent in after market trade on the Nasdaq after the company reported a smaller-than-expected quarterly loss on Thursday.

Reporting by Alastair Sharp and Solarina Ho; Editing by Jan Paschal

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