May 22, 2013 / 12:48 PM / 6 years ago

TSX edges up as Fed talk buoys golds, drags banks

TORONTO (Reuters) - Canada’s main stock index climbed on Wednesday, led by gold miners, after a day of choppy trading as optimism that the U.S. Federal Reserve will keep its easy money policy in place for now was tempered by fears of a stimulus rollback.

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

The resource-heavy market, which advanced for the fourth straight session, reached its highest in more than two months due to early gains.

Fed Chairman Ben Bernanke said the central bank’s monetary stimulus is helping the U.S. economy recover, but added the bank needs to see further signs of traction before taking its foot off the gas.

Central banks are hesitant to turn off the tap because of the risks involved and the unprecedented scale of government spending, said Michael Sprung, president of Sprung Investment Management.

“Government officials are dancing on the head of a pin themselves,” he said. “They don’t want to do anything to destabilize the economy.”

“We’ve never seen an environment where the market is held up by such massive spending by governments,” he added. “That cannot be sustained forever.”

With Wednesday’s gains, the benchmark Canadian index is up about 2.6 percent on the year.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 10.07 points, or 0.08 percent, at 12,752.50. It earlier hit 12,889.26, its highest point in more than two months.

“The market, like a drug addict, is addicted to lower interest rates,” said John Ing, president of Maison Placements Canada. “Even hints of higher interest rates are enough to remove the props from the market.”

Seven of the 10 main sectors on the index were in the red.

Energy shares fell 0.1 percent.

In company news, Talisman Energy TLM.TO said it expects to remove the faulty platform at its Yme oilfield in the North Sea next year and to submit a new plan for a new installation by the first half of 2015. The stock rose 0.7 percent to C$12.23.

Financials, the index’s most heavily weighted sector, were down 0.1 percent.

But gold shares, down about 37 percent since the start of the year, gained more than 2 percent and helped the materials sector gain 1.7 percent.

Goldcorp Inc (G.TO) rose 3.1 percent to C$28.19, and Barrick Gold Corp (ABX.TO) added 1.7 percent to C$20.21.

Editing by Nick Zieminski and Chris Reese

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