TORONTO (Reuters) - Financial shares pushed Canada’s main stock index higher on Thursday after the European Central Bank cut interest rates and insurers Manulife Financial Corp (MFC.TO) and Great West Life (GWO.TO) reported encouraging earnings.
The market was also supported by data showing the number of Americans filing new jobless benefits claims fell sharply last week to its lowest level since the early days of the 2007-09 recession, a sign the job market is still healing even though the economy remains weak.
The European Central Bank cut interest rates for the first time in 10 months, promising to provide as much liquidity as euro zone banks need well into next year and to help smaller companies get access to credit.
But the gains were limited by data that showed manufacturing across the world stumbled last month, underlining the fragility of the global economy and building the case for more action by leading central banks.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 58.35 points, or 0.47 percent, at 12,379.64.
The resource-filled index, whose direction is closely tied to the path of the global economy, is down on the year, trailing gains on the S&P 500 .SPX and other U.S. stock indexes.
“For Toronto, a move above 13,000 would be a major event that could bring a lot of people back into the market,” said Ron Meisels, technical analyst and president of Phases & Cycles in Montreal. “Retail investors are sitting on their hands.”
“Historically, Toronto does best in the tail-end of the bull market,” he added.
Investors entering the market must be selective about where they put their money, said Julie Brough, vice president at Morgan Meighen & Associates. “This is a stock picker’s market; it’s not an indexing market.”
“To get the index aggressively moving upward again, you need some support from the resources,” she added. “Right now we don’t have the foundation for that.”
Seven of the 10 main sectors of the index were higher on Thursday. Financials, the index’s most heavily weighted sector, gained 0.9 percent, getting support from Manulife, whose shares were up almost 4 percent at C$15.33.
Manulife reported a 56 percent drop in profit in the first quarter but met expectations, while earnings at rival Great-West Lifeco Inc (GWO.TO) rose 15 percent.
Great-West shares climbed 1.3 percent to C$27.63.
The materials sector, which includes mining stocks, was up 0.5 percent, helped by higher bullion prices. <GOL/>
But shares of miner Goldcorp Inc (G.TO) fell 0.6 percent after the miner reported a 35 percent drop in first-quarter profit as lower metal prices and higher costs outweighed a boost in gold sales.
The index’s healthcare group gave back 1.2 percent as Catamaran Corp CCT.TO tumbled 7.2 percent after the pharmacy benefit manager reported first-quarter results. The stock was the biggest negative influence on the index.
Valeant Pharmaceuticals International Inc (VRX.TO) lost 2.1 percent after the drugmaker reported quarterly results and said it would seek acquisitions in markets avoided by its stiffest competition.
In other news, the government said after the market close that Stephen Poloz, head of the country’s export credit agency, will take over as Bank of Canada governor when Mark Carney leaves in June. That was a surprise for markets, which had tipped Carney’s senior deputy as the most likely choice.
Editing by Peter Galloway