TORONTO (Reuters) - Canada’s main stock index scored its largest gain in seven weeks on Wednesday as higher oil prices boosted shares of energy companies and investors bought back into banks after the initial shock of Britain’s vote to exit the European Union.
The broad gains echoed moves higher in global stocks as investors bet on central banks going easier on monetary policy in coming months.
The prospect of additional stimulus is supportive of commodity prices, a major driver of Canada’s resource-linked market.
Investors may also be anticipating better earnings growth, said Kevin Headland, senior investment strategist at Manulife Asset Management.
“We believe that the actual landscape in terms of earnings prospects is better in Canada from a year-over-year perspective as we get further and further away from the bottom of the oil market,” Headland added.
U.S. crude oil prices CLc1 settled $2.03 higher at $49.88 a barrel after a larger-than-expected drawdown in U.S. crude inventories [O/R], while the energy group surged nearly 3 percent.
Financial stocks rallied 0.9 percent, including gains for some of the country’s biggest banks. Royal Bank of Canada (RY.TO) rose 0.7 percent to C$76.90 and Bank of Nova Scotia (BNS.TO) advanced 1.2 percent to C$64.51.
But Canadian Imperial Bank of Commerce (CM.TO) fell 2.6 percent to C$97.92 after it said it would buy Chicago-based PrivateBancorp Inc PVTB.O in a cash-and-stock deal valued at about $3.8 billion.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 194.05 points, or 1.4 percent, at 14,036.74. It touched its highest since June 23 at 14,057.97.
Nine of the index’s 10 main groups ended higher.
Canadian National Railway Co (CNR.TO) advanced 1.4 percent to C$76.02, and industrials rose 1.7 percent overall.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1.6 percent. Spot gold XAU= rose 0.5 percent, renewing its post-Brexit gains after a pause on Tuesday.
The lone sector that fell was consumer staples. Empire Co Ltd (EMPa.TO), owner of the Sobeys supermarket chain, fell 11.3 percent to C$19.25 after its earnings disappointed.
Reporting by Alastair Sharp; Editing by James Dalgleish