June 19, 2012 / 9:15 PM / 7 years ago

CANADA STOCKS-TSX hits 5-wk high on Fed, Greece hopes

* TSX up 187.23 pts, or 1.6 pct, at 11,788.36
    * Hits highest level since May 10
    * Energy, financials lead gains
    * Markets upbeat ahead of U.S. Fed meeting

    By Jon Cook
    TORONTO, June 19 (Reuters) - Canadian stocks hit a five-week
high on Tuesday, as financial and energy shares rallied on hopes
the U.S. Federal Reserve will extend stimulus measures and as
fears about Greece exiting the euro zone receded.
    Markets rallied as the Federal Open Market Committee opened
a two-day meeting on interest rate policy, with expectations
high that the U.S. central bank may extend its "Operation Twist"
program by a few months from its planned end later in June.
    Greek parties promised on Tuesday to form a coalition
government soon that will seek concessions from the country's
European Union and International Monetary Fund lenders on its
punishing austerity program, and the euro zone signaled it was
ready to renegotiate the bailout deal.    
    "You combine all of that with a market that is ridiculously
oversold and you've got an opportunity for a pretty substantial
bounce," said Rick Hutcheon, president and chief operating
officer at RKH Investments.
    All of Canada's 10 main subgroups were higher, with the
financial sector leading the way, rising 2.3 percent.
    Gains were led by top lenders Royal Bank of Canada,
up nearly 4 percent at C$52.91, Toronto-Dominion Bank,
which rose 2 percent to C$80.13, and Bank of Nova Scotia
, which climbed 3 percent to C$53.13.
    The heavily weighted oil and gas group also jumped 2
percent. Suncor Energy was up 3.1 percent at C$30.16,
Cenovus Energy rose 4.4 percent to C$33.66, and
Enbridge Inc bounced 2.4 percent to C$40.10.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 187.23 points, or 1.6 percent, at 11,788.36.
It climbed to 11,801.94, its highest level since May 10.
    Adding to the gains was a good showing by Canada's top
fertilizer producers, which rose as corn futures hit a one-month
high on Tuesday as the hot and dry weather in the U.S. Midwest
threatened crop prospects for the summer. 
    Potash Corp was up 4.7 percent at C$41.79 and
Agrium climbed 3.1 percent to C$88.65. 
    Despite the allure of more stimulus, Canadian gold stocks
fell 0.7 percent on Tuesday. Losses were led by top gold
producers Goldcorp Inc, which slid 1.2 percent to
C$40.18, and Barrick Gold, down 0.4 percent at C$41.02.
    Gains in riskier asset markets were limited by concerns
about Spain's debt yields, which hovered above the 7-percent
level that has forced other euro countries to seek bailouts.
    "I certainly wouldn't want to lend these guys any money,"
said Barry Schwartz, portfolio manager at Baskin Financial
Services. "We're all going to suffer if Europe enters into a
worse recession and no one wants to see that."
    However, relief was not imminent, as European leaders
rejected pressure to deliver quick new measures to fight their
debt crisis at a summit of world leaders in Mexico.
    Those worries were compounded by a survey released on
Tuesday that showed German analyst and investor sentiment
dropped in June at its fastest rate since October 1998,
indicating the euro zone's strongest economy may be vulnerable
to the effects of the region's debt crisis. 
    Hutcheon said the broad selloff in Canadian resource stocks
that has happened since May could easily turn into an extended
summer rally should conditions stabilize in Europe and we get
better data from the United States and China.
    "This market could easily be up 1,000 points just on a
bounce," he said. "If it wants to change direction and start an
uptrend, we're heading back to 14,000 by year-end."
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