TORONTO (Reuters) - Canada’s main stock index rose on Tuesday, helped by Bank of Nova Scotia’s (BNS.TO) dividend hike and surprise profit jump as well as U.S. economic data that spurred broad gains.
Investors also took comfort from China’s announcement of record government spending this year, which helped lift commodity prices.
Data showed that the vast U.S. services sector grew at its fastest pace in a year in February.
“The ISM numbers are a bit of a surprise. That’s giving more credence to a supportive U.S. economy,” said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 28.63 points, or 0.23 percent, at 12,736.04, after falling in the previous two sessions. Seven of the ten main sectors gained.
The bounce was even more pronounced in the United States, Canada’s largest trading partner by far, where the Dow index .DJI surged to close at a record high, breaking through levels last seen in 2007. .N
Commodity investors took encouragement from China’s vow on Tuesday to deliver economic growth this year of 7.5 percent and concentrate on boosting domestic consumption. The target is unchanged from 2012.
Along with China’s spending plans, which were expected to sustain the country’s economic growth, the market was encouraged by signs that the world’s top central banks are likely to stick to their easy monetary policies.
“Central banks around the world have been fairly explicit in their intentions to support economic growth,” Zohny said.
The confluence of positive factors added up to a clear indication to buy for many investors.
“There’s a bit of a snap-back in the market. It’s a reaction to the downward pressure we’ve seen lately,” said Michael Sprung, president of Sprung Investment Management. “Investors are trying to cautiously look for places to come back into the market.”
Scotiabank, Canada’s third biggest lender, was one of the biggest beneficiaries, adding 0.7 percent to close at C$61.32 after it said quarterly profit rose 13 percent, driven by acquisitions at home and abroad.
Its results capped off a week of stronger-than-expected quarterly reports from Canada’s top banks, which in many cases used lower loan-loss provisions, cost-cutting, and stronger international revenue to offset slower growth in domestic consumer lending.
“The banks have shown themselves to be in pretty good financial shape from the capital point of view. They expressed some confidence in that by increasing their dividends,” Sprung said.
Scotiabank raised its dividend by 5 percent, following similar increases by most of the country’s Big Six banks.
Financials, the index’s weightiest sector, were up 0.4 percent. In the sector, Toronto-Dominion Bank (TD.TO) gained 0.5 percent to C$85.43, and Canadian Imperial Bank of Commerce (CM.TO) rose 0.5 percent to C$83.36.
Energy stocks gained 0.3 percent, led by Suncor Energy’s (SU.TO) 0.8 percent gain to C$30.85, while the materials sector, which includes mining stocks and has been the worst performing part of the index so far this year, added 0.4 percent.
Additional reporting by Alastair Sharp and Cameron French; editing by Peter Galloway and Nick Zieminski