January 16, 2012 / 1:42 PM / 6 years ago

TSX ends higher, shrugs off euro zone downgrades

TORONTO (Reuters) - Canadian stocks ended slightly higher on Monday as commodity prices rose and markets largely absorbed last week’s euro zone ratings downgrades, while investors lacked direction from Wall Street, which was closed for the Martin Luther King holiday.

All three heavyweight sectors - financials, materials and energy - ended firmer.

Among the most influential gainers, Potash Corp POT.TO rallied nearly 2 percent to C$46.67, Suncor Energy SU.TO rose 1 percent to C$32.94 and Provident Energy PVE.TO surged 17.8 percent to C$11.20, after Pembina Pipeline PPL.TO said it would buy the natural gas producer for C$3.24 billion ($3.18 billion).

More broadly, the energy sector, up a modest 0.1 percent, benefited a bit from higher oil prices, driven by growing tensions between Saudi Arabia and Iran. <O/R>

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 27.54 points, or 0.23 percent, at 12,258.60 amid light volume - a dull start to the week after a fairly positive start to 2012.

“I think it’s typical lackluster action on a day when the U.S. markets are closed, but the comforting thing is that there really hasn’t been any drastic or negative impact from the debt downgrades of the European nations that we saw late on Friday,” said Elvis Picardo, strategist and vice-president of research at Global Securities in Vancouver.

“The fear was that investors are getting a little too comfortable with the macro risk of sovereign debt ... but having said that we have to wait and see how the U.S. markets will react tomorrow.”

Overseas, European shares and the euro also recovered from early losses triggered by Friday’s downgrades, but they still looked vulnerable amid rising fears of a disorderly Greek debt default. <MKTS/GLOB>

The aftershock from the downgrades of nine euro zone countries by Standard and Poor‘s, including France’s triple-A mark, dissipated by Monday as investors had mostly priced in the turbulence.

“An awful lot of this is baked in,” said Bob Gorman, chief portfolio strategist at TD Waterhouse. “Ratings agencies tend to be a lagging indicator rather than a leading one. They respond to what has happened rather than what is going to happen.”

Market attention is likely to switch on Tuesday to the state of the euro zone’s economy with the latest ZEW survey on the health of the powerhouse German economy due.

In individual company news, Research In Motion RIM.TO gained 1.8 percent to C$16.86 after showing off a major update to the QNX-based software running its poor-selling PlayBook tablet and unveiling minor improvements to its legacy BlackBerry phone software at the Consumer Electronics Show.

Canadian National Railway CNR.TO shares fell 2.5 percent to C$76.28 on the heels of analyst downgrades after the company asked ex-CEO Hunter Harrison to reconsider the idea of taking over as chief executive at rival Canadian Pacific CP.TO.

Additional reporting by Jon Cook; editing by Rob Wilson

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