TORONTO (Reuters) - Canada’s main stock index finished higher on Wednesday with banks and resource stocks leading the way, bucking a decline in U.S. equities, which fell on waning optimism over a timely resolution to the U.S. budget crisis.
With less than two weeks left to avert automatic U.S. tax increases and spending cuts that threaten to throw the economy back in recession, talks between congressional Republicans and the White House have stalled.
Global markets have generally rallied and retreated on the tides of investor sentiment over the budget talks in Washington.
“It’s very weird because the U.S. kind of keeled over today over worries that there won’t be enough to time to seal a deal. Toronto kind of shrugged that off,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
“Maybe people decided to do a little bit of early Christmas shopping and take advantage of the fact that the TSX has gone essentially nowhere this year,” he said. “Especially some of those commodity stocks have gone worse than nowhere. They’ve been detrimental to your portfolio.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished up 69.29 points, or 0.56 percent, at 12,403.63. Nine of the index’s main groups were positive.
“Traders are not exactly sure which way to go,” said Gareth Watson, vice president, investment management and research, at Richardson GMP. “There’s probably more optimism involved here than a couple of weeks ago. But still definitely a lot of caution out there.”
“The banks look great,” said Schwartz. “Most banks had a record year in 2012. It’s hard to come up with a scenario that’s going to derail it.”
Energy stocks rose 0.36 percent, with Transcanada Corp (TRP.TO) up 1.01 percent at C$46.79. Oil prices rose on expectations that the U.S. budget crisis would be resolved, heading off the threat of recession in the world’s top oil consumer.
Materials were up 0.4 percent. First Quantum Minerals Ltd (FM.TO) led with a 7.32 percent rise to C$21.55.
Technology stocks gained 0.91 percent, tracking U.S. technology shares following strong results from Oracle Corp.
Looking ahead, BlackBerry maker Research In Motion RIM.TO, which reports quarterly results on Thursday, finished up 0.15 percent at C$13.49, after earlier climbing nearly 1.8 percent.
“Obviously we don’t want to see them burning through cash, we don’t want to see them losing subscribers ... but nothing counts until we get confirmation that the BB10 takes off,” said Schwartz.
Editing by Peter Galloway and Leslie Adler