April 5, 2011 / 9:28 PM / 7 years ago

CANADA STOCKS-TSX hits 4-week high as miners rally

 * TSX rises 52.18 points to 14,270.53
 * Highest level since March 7
 * Five index sectors rise  (Adds details, quotes)
 By Claire Sibonney
 TORONTO, April 5 (Reuters) - Toronto’s main stock index rose for a sixth straight session on Tuesday and hit a four-week peak as the gold price reached a record high and copper shrugged off an interest rate hike in China, pushing up mining shares.
 Shares of precious-metals miners surged 4.6 percent. [GOL/] as the price of gold surpassed $1,450 an ounce on safe-haven buying spurred by new highs for crude and corn prices, which fanned inflation fears. A Portuguese credit downgrade drew attention back to euro zone woes, which also helped push up the gold price.
 Among the biggest gainers, Barrick Gold Corp (ABX.TO) shot up 5.2 percent to C$52.36, and Goldcorp (G.TO) soared 5.8 percent to C$50.30.
 “It comes down to inflation. It’s difficult for people to deny that inflation is a headwind going forward and I think it’s starting in the emerging markets and we’re seeing it come out of some of the developed markets,” said Philip Petursson, managing director of the portfolio advisory group at Manulife Asset Management.
 “I think it’s just a matter of time before it shows ... more of a headline number in North America. The rising gold, I think, is reflective of that as well as reflective of the weak fundamentals around the U.S. dollar.”
 Base-metal miners rose 1.5 percent, pushing the index’s heavyweight materials sector up 2.9 percent as the price of copper ended higher, even though China’s giant appetite for the metal has softened since the start of the year. [MET/L]
 Also on Tuesday, China’s central bank raised interest rates for the fourth time since October in a bid to cool stubborn price pressures, a move that might curb its demand for metals. [ID:nL3E7F51LX]
 Diversified miner Teck Resources TCKb.TO added 2.3 percent to C$56.38, while First Quantum Minerals (FM.TO) rose 1.9 percent to C$140.
 Petursson noted that the strength in miners was also due to expectations of more takeovers in the sector after Minmetals Resources (1208.HK), China’s biggest metals trading firm, offered $6.5 billion on Monday to buy Equinox Minerals EQN.AXEQN.TO.  [ID:nL3E7F30DI]
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 52.18 points, or 0.37 percent, at 14,270.53, its highest level since March 7. Five of the index’s 10 main sectors rose.
 Financials dropped 0.6 percent with Royal Bank of Canada (RY.TO) falling 0.5 percent to C$60.30, and Toronto-Dominion Bank (TD.TO) losing nearly 1 percent to C$85.29.
 The index’s energy sector also declined, down 0.3 percent, as U.S. crude oil futures settled lower ahead of weekly inventory reports, although prices still held above $108 a barrel on worries over unrest in Africa and the Middle East. [O/R]
 “I have a little bit more difficulty trying to justify oil at C$108 only on geopolitical risk. I think we are seeing it top out a bit and the oil producers will move in line with the oil price,” Petursson said.
 Suncor Energy (SU.TO) was down almost 1 percent at C$43.60, and Canadian Oil Sands Trust COS.TO was off 1.1 percent at C$33.13.
 The main index has risen almost 3 percent over the last five sessions, which could set the stage for a pullback.
 “Markets have had a really strong run,” said Peter Chandler, senior vice-president at Canaccord Wealth Management.
 “For a variety of reasons, there may be some pause in economic activity, or the growth of it, that may make the market have to digest what it’s done before it can think about what it wants to do next.” 
 He counted rising food and energy costs, the Chinese rate hike, and slower auto production as some of the headwinds that may slow consumer spending and business growth.
 U.S. data showed growth in the vast U.S. services sector slowed last month and price pressures eased slightly, according to the Institute for Supply Management, but overall activity expanded for a 16th straight month. [ID:nN05119497]
 In individual company news, TMX Group (X.TO) was down 0.7 percent to C$39 as analysts assessed that Australia’s veto of a foreign bid for its main stock exchange will make it easier for Canadian regulators to block the London Stock Exchange’s (LSE.L) takeover offer forTMX, owner of the Toronto Stock Exchange and other Canadian markets. [ID:nN05190035]
 ($1=$0.96 Canadian)  (Reporting by Claire Sibonney; editing by Peter Galloway)                                        

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