TORONTO (Reuters) - Canada’s main stock index rebounded from a six-week low on Friday as stronger-than-expected jobs reports at home and in the United States bolstered expectations that the economic recovery has momentum.
“Both the U.S. and the Canadian employment data — people get worried because they figure that’s the end of the quantitative easing and tapering will kick in. But when it comes down to it, cooler heads prevailed,” said Irwin Michael, portfolio manager at ABC Funds, pointing to the benefit of a stronger economy.
Bank stocks, which had weakened on Thursday following mixed quarterly results from three big lenders, led the push higher. Royal Bank of Canada (RY.TO), up 1.3 percent at C$69.05, was the most influential stock in leading the index up.
Bank of Nova Scotia (BNS.TO) gained after it reported a 12 percent rise in quarterly profit on Friday, helped by strength in its Canadian retail business. Its earnings per share, however, were slightly below the average analyst estimate.
Shares of Scotiabank rose just over 1 percent to C$63.98. Toronto Dominion Bank (TD.TO), Bank of Montreal (BMO.TO) and Canadian Imperial Bank of Commerce (CM.TO) all saw advances of more than 1 percent. Overall, the banking sector .SPTTFS was up 1.1 percent.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 0.6 percent, or 80.32 points, at 13,280.72.
Six of the index’s 10 main groups finished higher, but the index on the whole was down nearly 0.9 percent for the week.
“Most people are shutting down, they’ve taken all the losses and gains for the year. So the least path of resistance is up,” said Michael.
The day’s economic data helped give the market a positive tone. Canada added 21,600 jobs last month, far more than the 12,000 economists had forecast, while the unemployment rate held at 6.9 percent. The United States created 203,000 jobs in November, also more than expected.
“Just as a general rule, I think we are on a trajectory that’s more positive than negative, and I think that’s what you’re seeing globally,” said Paul Harris, portfolio manager at Avenue Investment Management in Toronto.
The U.S. jobs report increased expectations that the Federal Reserve will soon start to reduce economic stimulus. Although markets have been reacting negatively to that prospect, investors on Friday were more encouraged by the stronger economic picture.
“Tapering will create a short-term volatility and may cause the stock market to go down, but I think in the long run that’s good, because you will get a pullback and people should be buyers of the stock market then,” Harris said.
Gold miners and energy companies retreated after earlier gains. Gold miners were off 0.1 percent after rising 1 percent earlier, while the energy sector .SPTTEN eased 0.4 percent. Suncor Energy Inc (SU.TO) was the most influential stock on the downside, shedding 1.5 percent at C$35.73.
Miner Centerra Gold (CG.TO) dropped 8.6 percent to C$3.42 after news that Kyrgyzstan is suing the company for $304 million over what the government says is ecological damage.
Additional reporting by Leah Schnurr; Editing by Peter Galloway and Leslie Adler