TORONTO (Reuters) - Canada’s main stock index hit a one-month high on Tuesday as positive German economic data and hope for a solution to Washington’s fiscal deadlock boosted financial and energy shares.
A gauge of German analyst and investor morale rose sharply in December, fueling hopes that Europe’s largest economy will avoid recession this winter.
“It shows that there is some prospect that the European economy may be starting to gain a little bit of traction. It’s better than the numbers we’ve been seeing,” said Rick Hutcheon, president and chief operating officer at RKH Investments.
Hutcheon said Canadian economic data was also encouraging. A Statistics Canada report showed the country’s trade deficit unexpectedly shrank in October as imports fell to a 15-month low while exports increased.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 51.89 points, or 0.42 percent, at 12,282.36. That was above its moving average for the last 50, 100 and 200 days. Earlier in the session it hit 12,306.82, its highest point since November 7. All 10 main sectors on the index closed higher.
“Today is a fairly decent example of a broad uptick,” said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP in Vancouver.
Zohny pointed to the culmination of a two-day U.S. Federal Reserve meeting on Wednesday as a positive force. “Some investors are looking at that positively, potentially a little more clarity on the direction of monetary policy and their view of the economy,” he said.
Though no concrete signs of progress were made public on Tuesday, a quickening in the pace of U.S. talks to avoid the “fiscal cliff” of looming spending cuts and tax jumps was also bullish for the market.
A failure to avert “the cliff” would threaten a recession in Canada’s biggest trading partner.
Potash Corp POT.TO had the biggest positive effect on the index, gaining 2.5 percent to C$40.36, its second straight day of gains, which brought the stock to its highest level since October 22.
Shares in Research In Motion RIM.TORIMM.O rose 5.8 percent to C$12.42 after Cormark Securities raised its price target on the stock to $16 from $12, citing an improving outlook for the embattled BlackBerry maker.
The financial sector, the index’s biggest, rose 0.7 percent.
Royal Bank of Canada RY.TO gained 0.6 percent to C$58.87, Bank of Nova Scotia BNS.TO added 1 percent at C$56.50, and Toronto-Dominion Bank TD.TO ended 0.5 percent higher at C$80.61.
The energy sector climbed 0.2 percent, helped by higher oil prices ahead of a meeting of OPEC countries. <O/R> In the group, Canadian Natural Resources Ltd CNQ.TO rose 1.1 percent to C$28.32 and Enbridge Inc ENB.TO gained 0.5 percent to C$41.88.
Additional reporting by Alastair Sharp; Editing by Peter Galloway