* TSX up 226.59 points, or 1.9 percent, to 12,468.35
* Optimism on Greece helps drive gains
* Canadian Natural up 9 pct after earnings report
* Analysts await U.S., Canadian payrolls data (Adds further analyst comment, detail)
By Jon Cook
TORONTO, Nov 3 (Reuters) - Toronto’s main stock index closed up more than 1 percent for a second straight session on Thursday, spurred by Greece’s reversal on a euro zone bailout referendum and a surprise interest rate cut by the European Central Bank.
After a call for his resignation by opposition party members, Greek Prime Minister George Papandreou softened his stance to hold a confidence vote on the country’s euro zone rescue fund, lifting the mood across global financial markets. [MKTS/GLOB]
“If there’s no referendum then that suggests the plan that the euro zone leaders put into effect last week will move forward,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri. “That clearly was taken as a positive by the markets.”
Markets have been highly susceptible to large swings as developments in the euro zone quickly overshadow corporate earnings and global economic data.
Oil and gold prices also got lift from the ECB’s surprise decision to cut its main interest rate to help tackle the debt crisis, a move that promised to boost credit availability and brighten prospects for commodity demand. [O/R] [GOL/] [MET/L]
“That was a huge surprise,” conceded Warne, adding it suggests “the European Central Bank will now respond more appropriately to conditions in Europe than what seemed to be the case over the last few months.
Nine of the 10 main sectors were higher, led by energy issues, which were up more than 3 percent.
Canadian Natural Resources (CNQ.TO) led the sector and broader market higher, rising 9.3 percent to C$38.23. Suncor Energy (SU.TO) was up 4.4 percent to C$33.20.
Canadian Natural’s quarterly profit rose 40 percent and topped analyst expectations on higher output and crude price, with the country’s No. 2 oil producer forecasting a 17 percent production rise in 2012. [ID:nL4E7M31JS]
Strong oil prices were also cited as the main reason for a projected 10 percent rise next year for Canadian oil and natural gas drilling production, the Petroleum Services Association of Canada said in its annual forecast. [ID:nN1E7A21GF]
The materials sector gained more than 2 percent, aided by higher base metal and gold prices. Barrick Gold (ABX.TO) was the biggest gainer, rising 2.6 percent to C$52.50.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished up 226.59 points, or 1.9 percent, to 12,468.35.
The TSX ended the previous week at 12,519.51, before plunging nearly 5 percent to 11.913.72 this week on news of the Greek vote.
A U.S. Institute for Supply Management report that showed the vast U.S. services sector slowed modestly in October to its lowest level in three months, produced a slight drag on markets. [ID:nN1E7A20JG]
Analysts had expected better ISM data, but were still cheered by the employment component of the report, which improved to its highest level since June.
“It was actually pretty strong,” said Robert Kavcic, an economist with BMO Capital Markets, noting “it points to decent growth and payrolls tomorrow.”
Canada also has jobs data out Friday. Analysts expect a 12,200 gain in jobs and an unemployment rate of 7.1 percent. ECONCA
In individual company news, shares of Yellow Media Inc YLO.TO rose 28 percent to 44 Canadian cents after it posted a 14 percent rise in third-quarter profit. [ID: nL4E7M32VE]
Valeant Pharmaceuticals (VRX.TO) rose more than 13 percent to C$44.08 after the specialty drugmaker said it would buy back up to $1.5 billion of its stock or debt, and that it returned to profit on a surge in revenue. [ID: nNN1E7A20BY]
Magna International (MG.TO) shares fell 2.1 percent to C$35.23 after it reported its earnings dropped sharply, partly due to rising costs at its European operations. [ID:nL4E7M31OM] (With additional reporting by Claire Sibonney; Editing by Jeffrey Hodgson)