November 3, 2011 / 9:35 PM / 7 years ago

CANADA STOCKS-TSX surges on Greek hopes, ECB rate cut

 * 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 jobs data  (Adds financial sector details)
 By Jon Cook
 TORONTO, Nov 3 (Reuters) - Toronto’s main stock index closed up more than 1 percent on Thursday for a second straight session, spurred by Greece’s move to abandon a referendum on the euro zone bailout plan and by a surprise interest rate cut by the European Central Bank.
 Global market relief over the shift away from the referendum, which had threatened to unravel the euro-zone’s plan to deal with the debt crisis, lifted oil and metals prices, which helped pushed up the TSX index’s resource sectors. [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 recently as developments in the euro zone have quickly overshadowed corporate earnings and global economic data.
 The ECB’s surprise decision to cut its main interest rate to help tackle the debt crisis also gave oil and gold prices a lift as it promised to boost credit availability and brighten prospects for commodity demand. [O/R] [GOL/] [MET/L]
 “That was a huge surprise,” Warne said, 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.
 The TSX index’s financial shares rose 0.8 percent. Bank of Nova Scotia (BNS.TO) drove the sector, gaining 1.9 percent to C$52.93.
 Manulife Financial (MFC.TO) shares rose 4.5 percent to C$13.11 even though the life insurer reported a steeper than expected loss in the third quarter. [ID:nN1E7A20B9]
 Sun Life Financial (SLF.TO) was among the biggest drags, falling 4.8 percent to C$22.85 after it reported a sharp third-quarter loss and said its earnings sensitivity to weak financial markets was increasing. [ID:nN1E7A20LR]
 Nine of the index’s 10 main sectors were higher, led by energy issues, which were up more than 3 percent.
 Canadian Natural Resources (CNQ.TO) led the energy sector 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 due to an increase in output and higher crude prices. The country’s No. 2 oil producer also forecast a 17 percent production rise in 2012. [ID:nL4E7M31JS]
 The index’s materials sector gained more than 2 percent, aided by the higher base metal and gold prices. Barrick Gold (ABX.TO) was the biggest gainer, rising 2.6 percent to C$52.50.
 Overall, the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished up 226.59 points, or 1.9 percent, at 12,468.35. The TSX ended last week at 12,519.51, before plunging nearly 5 percent to 11.913.72 this week on news of Greece’s referendum plan.
 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 stronger ISM data, but were still cheered by the employment component of the report, which rose to its highest level since June.
 “It was actually pretty strong,” said Robert Kavcic, an economist with BMO Capital Markets. “It points to decent growth and payrolls tomorrow.”
 Both the United States and Canada report employment figures for October on Friday. In Canada, 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 reported a quarterly profit and said it would buy back up to $1.5 billion of its stock or debt. [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]
 ($1=$1.01 Canadian)  (With additional reporting by Claire Sibonney; Editing by Jeffrey Hodgson and Peter Galloway)                 

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