TORONTO (Reuters) - Canada’s main stock index jumped almost 1 percent on Friday, led by gains for energy companies as crude oil prices surged, helping the index eclipse most of the losses sustained earlier in the week.
Unexpectedly robust jobs data added to evidence of a pick-up in the domestic economy, aiding investor confidence, although the boost from higher crude was seen as the dominant catalyst.
“In my view it has much less to do with the labor force data and much more to do with the gains in the price of oil today, which have been quite substantial,” said Philip Petursson, chief investment strategist at Manulife Investments.
The energy group climbed 2.7 percent and oil prices jumped 6 percent, as drawdowns in U.S. stockpiles fed hopes that punishing global oversupply may be near a tipping point.
“We’re starting to see some support for higher oil prices over the next six months or so, coming out of the U.S. production data that again this week showed a drop,” Petursson said.
He said oil’s gains could be capped if prices get to $55 or $60 a barrel, which could prompt the return of some of that U.S. production. U.S. crude CLc1 settled at $39.72 a barrel on Friday for its biggest weekly gain in a month.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 130.29 points, or 0.98 percent, at 13,396.73. It slipped 0.3 percent on the week.
Canada added far more jobs than expected last month as service sector hiring accelerated and the unemployment rate fell from a three-year high, data showed.
The index’s financials sector gained 1.0 percent while the materials group, which includes precious and base metals miners and fertilizer companies, added 1.9 percent.
Valeant Pharmaceutical International Inc VRX.TO was one of the heaviest weights on the index, declining 6.1 percent to C$43.86 after sharp gains earlier in the week. Valeant said on Thursday its lenders had given the company an extra month to file its annual report, offering breathing room as it tries to win back investors.
Reporting by Alastair Sharp; Editing by Jeffrey Benkoe and James Dalgleish