TORONTO (Reuters) - Canada’s benchmark stock index rose to its highest level in nearly two months on Friday as investors cheered a move by China to cut interest rates and signs that the European Central Bank might step up asset purchases.
The surprise announcement was the first time in two years that China had cut rates, following signals that the pace of growth in the world’s second-biggest economy was slowing.
The move helped drive gains in the prices of commodities such as gold, copper and oil; and that pushed up shares in the mining and energy sectors. The Canadian equity market is heavily weighted in natural resource stocks, and the country is a major exporter of commodities.
Providing a further boost, ECB President Mario Draghi indicated that he was willing to take strong steps to prevent the euro zone from falling into deflation.
The benchmark TSX was up for the sixth day and recorded its sixth consecutive weekly gain, recovering from a sharp market correction in October.
“China is looking for ways to deepen and broaden its financial systems, its economy, and they are using market-based tools,” said Stephen Wood, chief market strategist, North America, at Russell Investments.
“This is still a world that is dominated by central bank activity,” he added.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 36.28 points, or 0.24 percent, at 15,111.46. Five of the 10 main sectors on the index were higher.
The materials sector, which includes mining stocks, climbed 0.8 percent. First Quantum Minerals Ltd (FM.TO) shot up 7.2 percent to C$19.12, and Teck Resources Ltd TCKb.TO jumped 9.4 percent to C$19.94.
Editing by James Dalgleish and Matthew Lewis