June 11, 2009 / 9:07 PM / 10 years ago

CANADA STOCKS-TSX closes near 8-month high on energy rally

* TSX rises 116 points to 10,714.11

* Hits highest level since Oct. 14

* Energy shares climb 1.9 pct in latest rally (Adds details and comments)

By Frank Pingue

TORONTO, June 11 (Reuters) - Toronto’s main stock index ended higher on Thursday as its weighty energy sector drew support from another rise in oil prices, helping the TSX reach its highest level in nearly eight months.

Shares of energy companies did much of the session’s heavy lifting as oil prices extended their three-day rally, topping $73 a barrel, on hopes for a recovery in world demand. [ID:nSIN191080]

That was enough to boost shares of EnCana Corp (ECA.TO) 1.8 percent to C$62.99, while Canadian Natural Resources (CNQ.TO) followed with a 2.3 percent gain to close at C$66.00. The energy sector as a whole climbed 1.9 percent.

The TSX’s latest move higher follows a pair of lackluster sessions in which it straddled the break-even level. It is now up 43 percent from the five-year low it reached in March, which some experts say is too much, too soon.

“The market looks stretched, it looks overbought, it looks out of breath, but it just doesn’t seem to want to stop,” said Rick Hutcheon, president and chief operating officer at RKH Investments.

“What keeps it up is simply the amount of money that’s sitting on the sidelines that’s afraid of missing the ultimate rally.”

The S&P/TSX composite index .GSPTSE finished up 116.13 points, or 1.1 percent, at 10,714.11. Earlier in the session it rose 128 points to 10,726.01, which marked its highest level since Oct. 14.

Another key driver behind the TSX’s gain was the financial index, which accounts for about 33 percent of the overall index. It finished the session up 1 percent on improved sentiment about global economic recovery.

Shares of Royal Bank of Canada (RY.TO) rose 0.8 percent to C$45.99, while insurer Manulife Financial (MFC.TO), the biggest driver behind the overall rise, rose 2.8 percent to C$24.82.

“It’s just more of a recognition that the financial sectors of the world are not going to fall off the edge of the Earth and people are picking away at them for value,” said Hutcheon. “If you are going to buy a bank, then the Canadian banks are a pretty good place to look.”

The TSX is up 1.37 percent this week heading into Friday’s session. If it can avoid relinquishing that gain it will record its fourth straight weekly gain.

$1=$1.10 Canadian Editing by Peter Galloway

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