TORONTO/OTTAWA (Reuters) - Canada’s main stock index rose modestly on Monday as broad gains supported by the heavyweight financial sector offset the drag of energy stocks’ retreat with lower oil prices.
Jean Coutu Group rose 1.7 percent to C$24.71 after grocery company Metro Inc said it would buy the pharmacy chain for C$4.5 billion ($3.6 billion) in cash and stock. Metro’s stock declined 1.3 percent to C$42.36. [nL4N1MD3UO]
The financials group , which accounts for more than a third of the index’s weight, added 0.6 percent overall, with Toronto-Dominion Bank up 1.4 percent at C$71.24 and Bank of Nova Scotia adding 0.7 percent to C$79.95.
Financials, and the Toronto stock market in general, have benefited from the view that the Bank of Canada will raise interest rates slowly following two back-to-back hikes, said Bryden Teich, portfolio manager at Avenue Investment Management.
Since Bank of Canada Deputy Governor Tim Lane last month said the central bank was watching how the economy will respond to the strengthening Canadian dollar, Toronto stocks have risen 3.5 percent.
“That was the inflection point for the market and we’ve gone basically straight up from there,” Teich said.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 70.06 points, or 0.45 percent, at 15,705.00. Of the index’s 10 main groups, eight were higher.
If economic growth continues to be strong and the Bank of Canada doesn’t move too aggressively, stocks could gain another 5 to 6 percent, Teich said.
The index is now just 1.5 percent away from the intraday record high it hit in February.
Diversified miner Teck Resources Ltd rose 3.2 percent to C$27.10 as copper held steady and lead and zinc prices jumped.
The materials group , which includes precious and base metal miners and fertilizer companies, added 1 percent. [MET/L]
But a 0.4 percent decline from the energy sector capped gains as oil prices were pressured by signs of higher output. U.S. crude fell $1.10, or 2.1 percent, to $50.57 a barrel. [O/R]
The most influential energy weights included Suncor Energy Inc, which declined 0.8 percent to C$43.38.
Smaller producers took larger hits, with MEG Energy Corp down 4.0 percent at C$5.27 and Crew Energy Inc off 3.6 percent to C$4.28. Cenovus Energy fell 1.3 percent to C$12.35.
Reporting by Alastair Sharp in Toronto and Leah Schnurr in Ottawa; Editing by James Dalgleish