November 10, 2010 / 9:38 PM / in 7 years

CANADA STOCKS-Resource rebound lifts TSX index

* TSX up 26.01 points, or 0.2 percent, at 12,942.64

* Resource shares rebound, lifts index from near-week low (Updates to close, adds quote)

By Jennifer Kwan

TORONTO, Nov 10 (Reuters) - Toronto’s main stock index ended higher after a volatile session on Wednesday as strength in the price of oil and gold helped to lift the market’s hefty commodity-linked issues.

The energy and materials sectors, both down substantially in early trade, recovered to gain 0.3 percent and 0.6 percent, respectively.

Canadian Natural Resources (CNQ.TO) added 0.9 percent to finish the day at C$40.03, while Barrick Gold (ABX.TO) gained 1.2 percent to C$51.84.

U.S. crude oil futures rose to a 25-month high on government data that showed a surprise drawdown in inventories last week. Gold prices were also firmer. [O/R] [GOL/]

Elvis Picardo, analyst and strategist at Global Securities in Vancouver, said commodity prices likely got a boost as the U.S. dollar trimmed gains. [FRX/]

“Earlier in the day, the U.S. dollar was fairly strong because of concerns over European debt. These concerns have resurfaced in recent days so the U.S. dollar had strengthened on the back of that,” he said.

“Those concerns at this point in time have receded a little bit. The U.S. dollar has also pared gains so commodities have recovered on the back of less strength in the U.S. dollar.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished up 26.01 points, or 0.2 percent, at 12,942.64, with seven of its 10 main groups higher.

Earlier, the TSX index dropped 1 percent to 12,786.97, its weakest level since Nov. 4.

Financials fell 0.3 percent, hurt by European debt concerns. Ireland’s high debt burden led investors in Europe to seek shelter in German bunds, which also helped push the euro lower against the dollar for a fourth straight day. [MKTS/GLOB]

Bank of Montreal (BMO.TO) fell 0.3 percent to C$59.22, while Bank of Nova Scotia (BNS.TO) sank 0.4 percent to C$54.39.

“If those debt concerns come back to haunt the markets it’s going to have a broad impact on a lot of economies. Even though Canada is not directly affected by what goes on in Europe it does affect investor sentiment,” said Picardo.

Royal Bank of Canada (RY.TO), Canada’s biggest lender, also got caught up in the negative mood, dropping 0.3 percent to C$54.25.

RBC’s shares could be pressured if the bank is labeled “too big to fail”, as the Financial Times newspaper suggested on Wednesday, but analysts says it is unlikely that RBC would ultimately be at a disadvantage versus its domestic rivals. [ID:nN10186099]

Apart from European debt levels, slower than expected import data from China, concerns about the U.S. Federal Reserve’s asset purchases and the upcoming Group of 20 summit in Seoul were some of the other factors weighing on investors’ minds.

$1=$1.00 Canadian Editing by Jeffrey Hodgson

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