TORONTO (Reuters) - Canada’s main stock index rose almost 1 percent on Tuesday, recovering some of the losses seen in Monday’s dramatic selloff, as economic data helped spur a rally in financial and energy shares.
Data showed consumer prices dropped last month, leaving room for the Federal Reserve to keep up its economic stimulus efforts. The Fed’s ultra-loose monetary policy has been one of the drivers of the stock market rally this year.
Still, the gain in Canadian stocks only partly made up for Monday’s 2.7 percent fall, its biggest one-day percentage drop since June.
“Cooler heads have prevailed today; you’re seeing some buying interest at these levels,” said Julie Brough, vice president at Morgan Meighen & Associates.
“Some of these stocks were dramatically oversold yesterday. There was a panic sell that was going on,” she added.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 115.04 points, or 0.96 percent, at 12,119.92.
The benchmark Canadian index is down 2.5 percent since the start of the year, a sharp contrast to the rally seen in U.S. stocks.
Shares of gold producers remained depressed, falling almost 1 percent, after slumping 9 percent on Monday as the price of the precious metal lost 8.5 percent.
“I don’t believe there’s a real opportunity in gold or gold equities in the near term,” said Stan Wong, vice president and portfolio manager at Macquarie Private Wealth.”
“It’s unlikely that gold will continue its previous upward trend without a strong catalyst, and I really don’t know where that catalyst could come from.”
News that the central bank of Cyprus might sell gold reserves to finance its European Union bank bailout was one of the triggers for the plunge in the price of gold on Monday.
Wong said investors need to watch out for the possibility of other European nations such as Italy and Portugal coming under pressure to sell their gold reserves, which are much bigger than those of Cyprus.
Nine of the index’s 10 main sectors were higher on Tuesday.
The only group to slip was the materials sector as a 3.7 percent rise in base metal mining stocks was offset by gold shares, which fell despite gold prices gaining about 1 percent. <GOL/>
Miner First Quantum Minerals Ltd (FM.TO) soared 9.3 percent to C$17.03.
Financials, the index’s most heavily weighted sector, climbed 1.3 percent.
Energy shares added 1.3 percent. Suncor Energy Inc (SU.TO) jumped 3.3 percent to C$28.41 and played the biggest role of any single stock in leading the market higher.
BlackBerry (BB.TO) shares rose 1.4 percent to C$14.21 after Jefferies & Co analyst Peter Misek said no abnormally high return rates have been seen for the new Z10 touchscreen device, which underpins the company’s attempt to reinvent itself. Demand for the smartphone appears to be positive in Asia, he wrote in a report.
Editing by Jeffrey Hodgson; and Peter Galloway