July 4, 2012 / 2:59 PM / 7 years ago

CANADA STOCKS-TSX hits 2-month high on ECB hopes

* TSX up 31.85 pts, or 0.3 pct, at 11,880.60
    * Highest level since May 4
    * Expectations of ECB rate cut boost financials

    By Jon Cook
    TORONTO, July 4 (Reuters) - Canada's main stock index hit a
two-month high in volatile trade on Wednesday morning as
financial shares rose, offsetting losses from the energy group,
on hopes for more monetary stimulus from central banks to help
counter the euro zone crisis.
    A day after the Toronto Stock Exchange's S&P/TSX composite
index recorded its biggest single-day percentage gain
this year, activity was subdued with U.S. markets closed for the
Independence Day holiday and ahead of policy decisions from the
European Central Bank and the Bank of England on Thursday.
    "We have a lot of high hopes in the investment world that
central banks ride to the rescue as they have before," said John
Stephenson, senior vice president at First Asset Investment
Management Inc.
    The financial group led gains, rising 0.5 percent as
investors anticipated the ECB will cut rates and that it may
also inject fresh funds to help boost the region's struggling
    Weak euro zone data on Wednesday added to expectations of a
rate cut. Activity in Germany's services sector unexpectedly
stagnated in June, while business expectations in France slumped
to the lowest level in three years. 
    Canada's major lenders were the main benefactors of the
central bank hopes, with Royal Bank of Canada climbing
0.5 percent to C$53.37, Toronto-Dominion Bank up 0.4
percent at C$80.04, and Bank of Nova Scotia rising 0.5
percent to C$53.59.
    Around 10:30 a.m. (1430 GMT), the TSX was up 31.85 points,
or 0.3 percent, at 11,880.60, its highest level since May 4.
    Paring gains was the heavily weighted oil and gas sub-index,
which edged 0.1 percent lower as U.S. crude fell 68 cents to
$86.98 after settling on Tuesday at its highest close since May
    Trican Well Service led losses, plunging 10 percent
to C$11 after RBC cut its target price on the stock to C$15 from
C$17 after the Canadian oil field services firm forecast a
bigger-than-expected second-quarter loss. 
    "The service companies have been miserable investments for
the last five or six months," Stephenson said. "The reality is
we're very challenged in the gas environment in North America,
but particularly in Canada."
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