July 26, 2012 / 9:47 PM / 7 years ago

CANADA STOCKS-TSX rallies on ECB pledge, Barrick weighs

* TSX up 147.24 pts, or 1.3 pct, at 11,639.75
    * Resource, financial shares lead gains
    * ECB comments ease euro zone fears
    * Barrick falls more than 4 pct after earnings

    By Jon Cook
    TORONTO, July 26 (Reuters) - Canadian stocks had their
biggest single-day gain in more than three weeks on Thursday,
led by financial and resource shares, as European Central Bank
President Mario Draghi's pledge to protect the euro zone from
collapse sparked a commodities rally.
    Global stocks rallied after Draghi, speaking in London, said
the ECB was ready, within its mandate, "to do whatever it takes
to preserve the euro." 
    The spurt of confidence in the outlook for the global
economy offset weak earnings from Barrick Gold -- the
world's largest gold miner.
    "That relieved tension somewhat and you saw a chain
reaction," said Bob Gorman, chief portfolio strategist at TD
Waterhouse. "As the euro rose, the U.S. dollar fell and in turn
commodities rose."
    The euro rallied to a two-week high against the dollar on
Draghi's comments, encouraging investors to buy
dollar-denominated commodities such as oil, gold and copper.
    Canada's powerhouse energy sector jumped 1.8 percent, as
U.S. oil prices rose on the improved confidence in Europe and on
a sharp drop in U.S. jobless claims, which fell to a near
four-year low. 
    Energy gains were led by top oil producer Suncor Energy
, which rose 3.2 percent to C$31.86 after reporting a 28
percent jump in second-quarter profit earlier this week. The
company on Wednesday also said it would scale back an ambitious
growth program that had troubled some shareholders.
    TransCanada Corp climbed 1.4 percent to C$44.80,
and Enbridge Inc shares rose 1.1 percent to C$42.05.
    The improved Europe sentiment helped Canadian financials,
which rose 1 percent. Gains were led by Bank of Nova Scotia
, up 1.3 percent to C$51.28, Royal Bank of Canada
, which edged up 0.9 percent at C$50.85, and Sun Life
Financial Inc, rising 4.2 percent to C$20.87.
    The Toronto Stock Exchange's S&P/TSX composite index
 finished up 147.24 points, or 1.3 percent, at
11,639.75. It was the index's largest one-day percentage jump
since July 3.
    Shares of Barrick, the world's largest gold producer,
plunged 4.2 percent to C$33.04 after the company reported a 35
percent decline in quarterly profit and said the cost of
building its massive Pascua-Lama gold mine in South America
would likely be 50 to 60 percent higher than the top end of its
earlier estimate of $4.7 billion to $5 billion. 
    "The market is disappointed that companies are not in more
control of their costs," said John Hughes, senior mining analyst
at Desjardins Securities. "That's evident today in the
Pascua-Lama project for Barrick."
    Barrick also announced it would defer work on its Donlin
Gold mine in Alaska, a project it shares with fellow gold miner
NovaGold Resources Inc. NovaGold's shares tumbled more
than 25 percent to C$4.07 on the news. 
    Despite the Barrick results, Canada's heavily-weighted
materials sector, which includes miners, finished up 1.6
    Goldcorp Inc, Canada's second largest gold producer, 
led gains, rising nearly 5 percent to C$36.50. Investors
overlooked the company's second-quarter loss, instead focusing
on its adjusted profit, which was in line with analyst
    Agnico-Eagle Mines Ltd saw its shares spike 7.6
percent to C$42.58 a day after it reported a 15 percent drop in
its second-quarter adjusted profit, but raised its 2012
production outlook. The company also said it increased its gold
output and that quarterly revenue rose to $459.6 million from
$433.7 million a year earlier. 
    Resource stocks were also boosted on hopes that the ECB and
the U.S. Federal Reserve will announce new stimulus measures
when the central banks' policy committees meet next week.
    "To the extent that we get quantitative easing, either from
Mr. Draghi or the Fed, it would be a real lift for gold and
oil," said Patricia Mohr, a commodity market specialist at
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