August 11, 2011 / 9:03 PM / 8 years ago

CANADA STOCKS-TSX surges to one-week high in oil, bank-led rally

 * TSX up 340.91 points, or 2.79 percent, at 12,539.80
 * Energy, financials drive gains, golds drag
 * Manulife rises as results tops estimates
 * Open Text drops 10.3 pct as results miss, targets cut  (Updates to close. Adds analyst comment)
 By Trish Nixon
 TORONTO, Aug 11 (Reuters) - Toronto’s main stock market index climbed nearly 3 percent on Thursday to its highest point in a week, as energy shares rebounded on the back of stronger oil prices and banks made up lost ground.
 The Toronto exchange tracked global markets, as investors swooped back into beaten-down stocks, encouraged by a surprise dip in American jobless claims and strong corporate results that provided a respite from overnight fears about the health of the euro zone banking system.  [MKTS/GLOB]
 “We are seeing so much volatility the last two days that its not surprising to get a bounce back today,” said Robert Kavcic, an economist at BMO Capital Markets.
 He noted that most of the strength in Canada was in shares of oil and gas producers.
 “That sector was really beaten down, and oil prices are still holding up in the mid-80 to dollar range. So actually the backdrop isn’t really too bad.”
 Energy issues rose 4.2 percent collectively, as oil prices rose for a second day, gaining as much as 3 percent. [O/R]
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 340.91 points, or 2.79 percent, at 12,539.80, rebounding after a 1 percent drop earlier in the session. Nine of the 10 main groups were higher.
 The gain comes after the index on Monday suffered its biggest intraday drop since 2009 and hit a near one-year low. After three days of rallying, the index closed up more than 3 percent on the week.
 The financial sector rose 3.1 percent, as Canada’s big banks and insurers took back the week’s losses, despite concerns about the euro zone banking system and signs of funding stress.
 Royal Bank of Canada (RY.TO) rose 3.4 percent to C$51.41, while Bank of Nova Scotia (BNS.TO), added 3.6 percent to C$53.77 and Toronto-Dominion Bank (TD.TO) was up 2.9 percent at C$76.05. All three were among the index’s top 4 influential gainers.
 Manulife Financial (MFC.TO) was another source of support, rising 4.6 percent at C$13.08 after its results topped estimates and rebounded from a year-earlier loss. [ID:nN1E77914S]
 Materials were up 1.16 percent, with Potash Corp POT.TO up 5.9 percent at C$54.22, leading the gains for the sector and the overall index.
 The sector advanced despite pressure from some gold-mining shares, which gave back some of Wednesday’s sharp gains as the price of gold recoiled from an all-time high. [GOL/] [MET/L]
 Kinross Gold led the index’s decliners, down 5 percent to C$15.50, while Iamgold Corp  (IMG.TO) lost 7 percent to C$18.96.
 “It’s not surprising,” said John Kinsey, portfolio manager at Caldwell Securities Ltd. “You are getting some profit taking in the metal, and that’s weakened some of the stocks.”
 Also weighing heavily was Open Text OTC.TO, which dropped 10.3 percent to C$51.84 and was the chief weight in the information technology group, which lost 0.1 percent.
 At least three analysts cut their price targets on the business software company, the day after it reported a rise in quarterly adjusted profit, but missed estimates. [ID:nN1E7791HI][RCH/CA]   (Editing by Jeffrey Hodgson)                  

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