TORONTO (Reuters) - Canada’s main stock index rose on Wednesday as strength in commodity prices supported energy and mining stocks, while shares in home retailer Rona Inc RON.TO almost doubled after a generous takeover deal.
The index snapped a two-day losing streak, rebounding from a one-week low earlier in the session as a weaker U.S. dollar helped drive commodity markets higher.
“This is all U.S. dollar related,” said Norman Levine, managing director, Portfolio Management Corp.
Since resource markets are priced in U.S. dollars, a lower U.S. dollar has a very positive effect on resource prices, he added.
The dollar hit its lowest level against the euro since last October on growing expectations for a slower pace of Federal Reserve rate hikes this year.
Oil prices jumped 8 percent [O/R], while gold rose to three-month highs.
The energy group rallied 4.5 percent. It included a 3.8 percent gain for pipeline company Enbridge Inc (ENB.TO) to C$47.87, while Canadian Natural Resources Ltd (CNQ.TO) was up 7.9 percent at C$29.94.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 150.76 points, or 1.21 percent, at 12,593.02. Seven of the index’s 10 main groups were in positive territory.
Rona’s stock jumped from below C$12 to C$23.30, just under the C$24 per share in cash U.S. retailer Lowe’s Cos Inc said it would pay.
“This is one of the first companies that is now going to be taken over by U.S. companies because our (Canadian) dollar is so low,” said Levine.
Jitters about global economic growth persisted, holding back financial and industrial stocks.
Financial sector stocks rose less than 0.2 percent, while industrials were nearly unchanged.
Canadian plane and train maker Bombardier <Inc BBDb.TO> fell 2.2 percent to $0.89. The company will soon announce plans for a reverse stock split, two sources familiar with the matter said, in order to remain a part of Canada’s benchmark stock index.
Magna International Inc (MG.TO) fell 5.5 percent to C$44.95.
Additional reporting by Alastair Sharp; Editing by James Dalgleish and Phil Berlowitz