August 1, 2013 / 12:50 PM / 5 years ago

Data, earnings push TSX higher, drive energy gains

TORONTO (Reuters) - Canada’s main stock index climbed on Thursday after a burst of data from China, Europe and the United States showed the global economic recovery was strengthening, boosting the price of oil and fueling a rally in shares of energy producers.

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

Investors also digested a wave of quarterly results, from industry bellwethers such as Suncor Energy Inc (SU.TO), Barrick Gold Corp (ABX.TO) and Enbridge Inc (ENB.TO).

U.S. crude oil prices jumped more than 2.5 percent, driven by supply problems in Africa and the Iraq as well as the news on the global economy.

The gains in energy shares follow a recent narrowing of the discount between the price of heavy Western Canada Select oil produced by many of the region’s companies and the lighter West Texas Intermediate benchmark.

“Investors are having more confidence in energy,” said Robert McWhirter, president and portfolio manager at Selective Asset Management. “Now that the spread has narrowed, people are convinced that oil companies are going to make some decent money.”

An industry report showed that the pace of growth in the U.S. manufacturing sector accelerated in July to the highest level in two years as new orders surged, supporting the view the economy will pick up in the second half of the year.

Separate data indicated the euro zone was slowly starting to emerge from recession, while business surveys showed China’s manufacturing sector was stabilizing.

The improving global economic outlook lifted commodity prices and boosted investor sentiment in the resource-sensitive Canadian market.

Also on Thursday, the European Central Bank said it would not tighten monetary policy until well into next year, a day after the U.S. Federal Reserve said it will maintain the pace of its bond-buying program for now.

Investors relished the combination of positive economic data and a lack of indication of imminent central bank policy tightening.

“It looks like we might be into a Goldilocks-type scenario, where the economy is starting to do better, but not so well that it pushes the central banks to tighten,” said Colin Cieszynski, senior market analyst at CMC Markets Canada.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 107.32 points, or 0.86 percent, at 12,593.96.

Eight of the 10 main sectors on the index were higher.

Shares of energy producers shot up 2.3 percent, benefiting from earnings reports and higher oil prices.

Suncor posted a second-quarter profit that missed analyst expectations by a penny, reflecting factors including the precautionary shutdown of third-party pipelines due to flooding in northern Alberta. Shares of Suncor, Canada’s largest energy company, climbed 3.9 percent to C$33.74 and were the biggest positive influence on the market.

Enbridge Inc (ENB.TO), Canada’s largest pipeline company, reported a 12 percent rise in second-quarter adjusted profit due to higher contracted volumes, lifting its shares 1.3 percent to C$46.18.

Shares of Bombardier Inc (BBDb.TO) fell slightly to C$4.95 after the aircraft and train maker reported a 22 percent rise in second-quarter profit as its train business grew, but pushed back the date when its new C-Series plane will be ready for delivery.

Barrick reported stronger-than-expected quarterly results, sending its shares up 2.7 percent even as it recorded an $8.7 billion impairment charge and cut its dividend by 75 percent.

Shares of Catamaran Corp CCT.TO were up 9.1 percent at C$59.03 after the pharmacy benefit manager said it would buy privately held Restat LLC for $409.5 million to expand its client base.

Editing by Leslie Adler

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