TORONTO (Reuters) - Canada’s main stock index rose on Tuesday as higher commodity prices boosted the shares of resource companies, while investors awaited the Bank of Canada’s interest rate decision on Wednesday which could produce the first increase since 2010.
Money markets are nearly fully priced for a rate hike, data from the overnight index swaps market shows.
“It sends a clear message to international investors that the Canadian economy is doing fine,” said Ian Nakamoto, equity specialist at MacDougall, MacDougall & MacTier, a division of Raymond James.
“Obviously, the Bank of Canada would not be raising rates if it thought it would cause a downturn in house prices.”
Investors have worried that a downturn in the country’s housing market, which had been red-hot in cities such as Toronto and Vancouver, could weigh on the economy.
Domestic data showed housing starts rose more than expected in June as construction plans in and around Toronto remained strong.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 43.86 points, or 0.29 percent, to 15,149.14.
It was led by a 1.3 percent gain for the energy group as oil prices climbed. Suncor Energy rose 2.0 percent to C$37.26, while Canadian Natural Resources advanced 1.5 percent to C$37.50.
U.S. crude oil futures settled 64 cents higher at $45.04 a barrel on reports showing forecast cuts in U.S. oil production and a decline in European product stockpiles.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1.2 percent.
Barrick Gold gained 0.9 percent to C$20.55 and Teck Resources Ltd climbed 3.8 percent to C$24.55.
Gold futures rose 0.2 percent to $1,214.2 an ounce, while copper prices advanced 0.9 percent to $5,877 a tonne.
Seven of the index’s 10 main groups rose. It included a 0.1 percent gain for the financials group, which accounts for about 30 percent of the index.
Shares of timber producers rose as wildfires in the western province of British Columbia disrupted timber and mining operations and forced thousands from their homes.
Also on the upside, shares of Alimentation Couche Tard rose 1.4 percent to C$60.15 after TD Securities raised its target to C$78 from C$75.
Additional reporting by Leah Schnurr in Ottawa; Editing by James Dalgleish