March 6, 2013 / 1:33 PM / in 5 years

TSX hits 5-week high on surge in gold, U.S. data

TORONTO (Reuters) - Canada’s main stock index hit a five-week high Wednesday, with gold-mining shares leading the way on higher bullion prices, and sentiment getting a boost from U.S. economic data and central banker comments.

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

Private employers in the United States, Canada’s biggest trade partner, hired more workers than expected in February, and demand for a range of factory goods was solid in January.

The U.S. Federal Reserve, in its Beige Book, said economic growth continued to improve gradually in January and early February as consumer spending picked up and the country’s battered housing market maintained a broad-based recovery.

But analysts said the U.S. central bank did not seem to suggest it was close to withdrawing monetary stimulus.

“The market is being supported by expectations for continued stimulus from central banks,” said Fergal Smith, a managing market strategist at Action Economics.

Gold stocks, which tend to react positively to commentary backing easy monetary policies, rallied the most and helped the materials group climb 3.4 percent.

“The materials sector has been beaten down. So it’s more of a corrective bounce,” Smith said. “You could also point to greater optimism because of the U.S. data or the Fed’s Beige Book, which was consistent with no change of policy.”

The materials group is down nearly 10 percent since the start of the year and is the worst-performing sector.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE unofficially closed up 95.92 points, or 0.75 percent, at 12,831.96, after reaching 12,833.49, its highest level since January 30. Eight of the 10 main sectors on the index were higher.

In Canada, the central bank softened its stance on the need for interest rate hikes on Wednesday, saying it will likely hold its benchmark rate steady for “a period of time” but that its next move would still probably be a hike rather than a cut.

Central bankers around the world have been reiterating their support for easy monetary policies, for now.

”No one is taking the punch bowl away yet,“ said Paul Hand, managing director at RBC Capital Markets. ”In the short term, investors aren’t worried about any dramatic shift in interest rate policy or liquidity positions.

“You’ve got the fragile economy in the U.S. and in Europe you have an economy ranging from barely moving forward to still looking for a bottom,” he added.

The materials sector, which includes mining stocks, was aided by a 0.4 percent rise in gold prices. <GOL/>

Goldcorp Inc (G.TO) added 4.7 percent to C$34.44, and Barrick Gold Corp (ABX.TO) was up 4.5 percent to C$30.61.

Energy shares gained almost 1 percent, with Suncor Energy Inc (SU.TO) rising 1.4 percent to C$31.28.

In company news, Torstar Corp (TSb.TO), publisher of the Toronto Star, Canada’s largest daily newspaper, cut 67 jobs and said it would rein in costs in 2013. It reported a big drop in quarterly profit and said the revenue outlook for its main media business was uncertain. The stock shed nearly 12 percent to C$7.00.

Editing by Nick Zieminski

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