September 13, 2010 / 9:12 PM / 8 years ago

CANADA STOCKS-Financials, commodities lead TSX higher

* TSX closes up 52.77 at 12,149.86

* Boosted by bank capital rules, Chinese data

* U.S. tax cut uncertainty in focus (Adds details, commentary)

By Claire Sibonney

TORONTO, Sept 13 (Reuters) - Toronto’s main stock index finished higher on Monday as the financial sector was boosted by an agreement on new global rules for bank capital reserves and resources got a lift from robust Chinese economic data.

The heavily weighted financial sector gained 1.4 percent as Royal Bank of Canada (RY.TO) climbed 2.1 percent to C$54.60, and Toronto-Dominion Bank (TD.TO) rose 1.3 percent to C$75.94.

Aiming to prevent a repeat of the international credit crisis, regulators agreed over the weekend on new global bank capital rules that, while tighter than before, were not as harsh as some had feared. [ID:nLDE68C1OV]

Canadian banks responded by saying they expect to be able to adopt the Basel III rules for maintaining reserve capital with little trouble, meaning dividend hikes and share buybacks could be on the way once Canada’s banking regulator gives the go-ahead. [ID:nN13189759]

“Clarity on capital requirements is a big sigh of relief,” said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management in Vancouver.

“Canadian banks are already well capitalized and now have some clarity and a green light to implement their dividend plans.”

Also benefiting riskier assets, said Zohny, was growing clarity about the fate of George W. Bush-era tax cuts in the United States.

Senate Republicans on Monday poured cold water on hopes for a compromise with President Barack Obama that would have allowed the tax cuts for the wealthiest Americans to expire at the end of the year if Congress fails to act. [ID:nN13199499]

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 52.77 points, or 0.4 percent, at 12,149.86, with six of its 10 main sectors higher.

“(I’m) seeing some fragile optimism come into the market as some of the uncertainty over the summer fades,” Zohny said.

Base-metal miners rose 4.5 percent, while energy issues gained 0.6 percent, as prices for oil and copper rose on data that showed strong Chinese demand growth and industrial output. [ID:nTOE68A00H] [O/R] [MET/L]

Teck Resources TCKb.TO gained 3.6 percent to C$40.68 and fellow miner First Quantum Minerals (FM.TO) rallied 5.6 percent to C$67.29. Oil company Canadian Natural Resources (CNQ.TO) added 2.4 percent to C$34.99.

“The Chinese August data package has reassured the market about the global recovery and has been positive for commodity markets,” said Fergal Smith, managing market strategist at Action Economics.

Limiting gains for the index were gold miners, down almost 1 percent, as the upbeat Chinese data dulled some of the precious metal’s recent safe-haven luster. [GOL/]

Barrick Gold Corp (ABX.TO) slipped 2.1 percent to C$45.40, while Goldcorp Inc (G.TO) lost 0.6 percent at C$42.60.

$1=$1.03 Canadian Additional reporting by Jennifer Kwan; editing by Peter Galloway

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