August 9, 2011 / 10:09 PM / 6 years ago

CANADA STOCKS-TSX rallies most in two years after Fed statement

 * TSX rises 438.30 points, or 3.76 percent at 12,109.26
 * Biggest one-day gain since May, 2009
 * All 10 sectors advanced
 By Trish Nixon
 TORONTO, Aug 9 (Reuters) - Toronto's main stock market
index had its biggest one-day rally in two years on Tuesday in
a wildly volatile session, as the U.S. Federal Reserve said it
will keep interest rates near zero for at least two more years
in a bid to spur growth.
 The rally ended a three-session rout that had knocked
Canadian stocks down nearly 9 percent on worries about another
U.S. recession following an embarrassing downgrade of U.S.
 "You've got two years of zero interest rates in the States.
So there's no danger of any recovery being sort of sideswiped
by the Fed raising rates," said Gavin Graham, president at
Graham Investment Strategy.
 "You are seeing the more economically sensitive sectors
doing quite well ... you are seeing a rebound from some of the
oversold things like the REITS and the financials."
 The market rallied despite the Fed's negative outlook on
U.S. economic growth, with investors taking hope from signals
that it was prepared to do more if necessary.
 Trading was volatile, with the index briefly turning
negative following the Fed statement before surging in late
trading. Trade volume was the highest this year, with more than
421.7 million shares changing hands.
 Financial issues led the rally, up 3.94 percent, with banks
making up half of the top 10 most influential gainers.
 Bank of Nova Scotia BNS.TO topped the list, up 5.7
percent at C$52.78, followed by Toronto Dominion Bank TD.TO,
up 4.7 percent at C$75.02, and Royal Bank of Canada RY.TO,
which added 3.6 to trade at C$50.24.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed the session up 438.30 points, or 3.76 percent
at 12,109.26. All 10 sectors advanced, and each notched gains
of 1 percent or more.
 The rally made up for much of the previous session's sharp
selloff, in which the index fell more than 4 percent to its
lowest level in nearly a year.
 Michael Smedley, chief executive of Morgan Meighen &
Associates, noted that many Canadian companies continue to
produce solid results and that the economy is still growing for
 Energy shares were up 3.9 percent, as crude oil futures
turned positive in post-settlement trading. Canadian Natural
Resources CNQ.TO was another top gainer, up 5.26 percent at
C$34.79. [O/R]
 Materials gained 3.8 percent, with beaten-down base-metal
miners leading the pack. Potash Corp POT.TO added 4.9 percent
to C$51.49, while Teck Resources TCKb.TO was up 9.6 percent
at C$41.43.
 Shares of Lundin Mining LUN.TO  rose 14.5 percent to
C$5.05 after a British newspaper report cited rumors that
mining giant BHP Billiton BLT.LBHP.AX could be considering
a bid. [ID:nL6E7J90G3]
 (Editing by Jeffrey Hodgson)

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