August 26, 2011 / 7:28 PM / 7 years ago

CANADA STOCKS-TSX recovers from lows on Fed hopes

   * TSX up 23.13 points, or 0.2 percent, at 12,307.44
 * Eight of 10 main sectors stronger
 * Bernanke offers no additional U.S. stimulus measures  (Updates to afternoon)
 By Claire Sibonney and Trish Nixon
 TORONTO, Aug 26 (Reuters) - Toronto’s main stock index rebounded in volatile trade on Friday as investors deemed an earlier sharp selloff overdone after digesting a speech by the Federal Reserve chairman which left the door open for more U.S. monetary stimulus.
 Most of the TSX’s 10 main sectors were positive, though financials - the most influential group - dragged the TSX to underperform its U.S. counterparts after disappointing results from Royal Bank of Canada (RY.TO), the country’s biggest lender.
 RBC tumbled 3.7 percent to C$48.89 after it reported a profit that missed estimates and said weak market conditions would likely continue to weigh. [ID:nN1E77N0YI]
 Other big banks skidded ahead of earnings releases next week. Toronto-Dominion Bank (TD.TO) dropped 1.5 percent to C$73.62 and Bank of Nova Scotia (BNS.TO) shed 1.1 percent to C$51.59.
 At 3:09 p.m. (1909 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 23.13 points, or 0.2 percent, at 12,307.44. Eight of the 10 main sectors were higher, including weighty materials and energy shares.
 Francis Campeau, a broker at MF Global Canada in Montreal, said investors were still looking for direction to take the TSX out of it is recent tight range and choppy trading - either above the Aug. 17 high around 12,700 or below the Aug. 8 low around 11,600.
 While Fed Chairman Ben Bernanke failed to offer any concrete action for monetary easing at a central bank conference in Jackson Hole, Wyoming, he said it was critical for the U.S. economy’s health to reduce long-term joblessness.
 “We remain in decision mode,” said Campeau. “I don’t think he said anything to trigger a strong rally, nor a strong selloff. I think we’re still in wait-and-see mode.”
  Bernanke also said the central bank’s policy panel would meet for two days in September instead of the usual one to discuss any more stimulus. While expressing long-term optimism, Bernanke said the Fed found recent developments troubling, and saw a low inflation rate. [ID:nN1E77O1LR]
 “The major anti-inflationary weapon was the leaving interest rates at zero for two years ...  It may well be that he’s keeping something in reserve in the event that we get further weakness through the fall. He doesn’t want to use up all his ammunition in one go,” said Gavin Graham, president at Graham Investment Strategy.
 “He did say the Federal  Reserve has a range of tools that could be used to provide additional monetary stimulus in addition to refining our forward guidance. So there are some other arrows left in his quiver.”
  On the upside, the top three gainers were Potash Corp POT.TO, which rose 3.7 percent to C$56.00, Teck Resources TCKb.TO, up 2.6 percent at C$40.45, and Canadian Natural Resources (CNQ.TO), up 1.1 percent at C$34.78.
 Gold issues were up 1 percent after swinging from losses to gains, though they lagged the rebound in the price of the precious metal. [GOL/]
 Kinross Gold (K.TO) rallied 2.2 percent to C$17.23, while Goldcorp (G.TO) gained 1.1 percent to C$50.60.  
 ($1=$0.99 Canadian)  (Reporting by Claire Sibonney; editing by Rob Wilson)                                        

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