December 20, 2011 / 1:52 PM / in 6 years

TSX has biggest one-day jump this month

TORONTO (Reuters) - Stocks had their biggest rise this month on Tuesday as resource issues rose in response to improved economic data out of the United States and Germany, and on renewed hopes the euro zone’s debt crisis can be contained.

All 10 of the TSX’s main sectors were higher, led by materials and energy issues, as commodity prices rose after U.S. November housing starts hit a 1-1/2 year high, suggesting the battered U.S. housing market was starting to recover.

The healthy housing data followed on the heels of a drop in the U.S. unemployment rate in November to 8.6 percent from 9 percent the previous month. [ID:nKWSbdbJa]

“You’re beginning to see some of the drags stabilize and modestly abate,” said Stephen Wood, chief investment strategist for Russell Investments in New York.

“It would be difficult to paint a robust economic environment, but there is a measurable upward grind in the U.S. economic data,” added Wood.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 177.18 points, or 1.54 percent, at 11,716.88. It was its highest close in a week.

Mining stocks drove gains in the heavily weighted material sector. Barrick Gold (ABX.TO) climbed 2.5 percent to C$47.45, while diversified base metal miner Teck Resources TCKb.TO jumped more than 4 percent to C$35.65.

There was also some positive news for Europe on Tuesday as data showed German business sentiment rose sharply in December, according to Ifo, a Munich-based think-tank, underscoring the resilience of Europe’s largest economy and casting a rare positive light on the euro zone.

Italian and Spanish bond yields fell, with investors hoping banks will borrow significant amounts of three-year funds from the European Central Bank later this week and spend some of the money on higher-yielding debt.

Canadian financials cheered the news, rising 0.6 percent, led by the Royal Bank of Canada (RY.TO), up nearly 1 percent at C$49.13.

Energy issues were also a key contributor, adding more than 2 percent as U.S. crude posted its biggest percentage rise since late October on supply fears spurred by protests in Kazakhstan and worries that major producer Iran could be hit by sanctions.

Canadian Natural Resources (CNQ.TO) was the index’s top gainer, rising 3.3 percent to C$36.26.

Weighing on the market was Research In Motion RIM.TO, which tumbled 3.5 percent to C$12.90 as the BlackBerry maker continued to slide on investor doubts about its prospects in an increasingly competitive smartphone market.

Despite RIM’s tumble, investment manager sentiment towards Canadian and international equity markets improved in the fourth quarter, with Canada viewed as an attractive market, according to the Russell Investment Manager Outlook.

Still, some analysts were skeptical about the sustainability of the rally, noting that Europe continued to struggle and the U.S. housing market could slump again in the new year.

“I’ll take the rally as far as it goes, but I don’t think it’s necessarily a reflection of any sort of fundamental improvements in economic conditions,” said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal.

($1=$1.03 Canadian)

Editing by Rob Wilson

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