*TSX up 8.49 points, or 0.07 percent, at 11,936.08
*Energy, base-metals, financial groups higher
*RIM shares drop 2.9 percent on Goldman rating
*Biovail rises 14.5 pct on news on Valeant deal (Updates to close)
By Claire Sibonney
TORONTO, June 21 (Reuters) - Toronto’s main stock index closed slightly higher on Monday, but beat a profit-taking retreat from a sharp early rally that was spurred by China’s vow to allow its currency to trade flexibly.
Before giving back most of their gains by the end of the day, shares of base-metal miners shot up more than 3 percent as copper prices rose on hopes that China’s move would increase its demand for industrial metals. China is already the world’s largest consumer of industrial metals . [MET/L]
Teck Resources TCKb.TO jumped 3.6 percent to C$36.67, while First Quantum Minerals (FM.TO) soared 4.4 percent to C$64.59.
“The big news of the day today was China ... I think that makes investors a little more comfortable,” said Aaron Fennell, senior markets strategist at futures brokerage Lind-Waldock.
“It will loosen up some of the imbalances that are present in the global economy, particularly between the United States and China ... countries like Canada and some European countries also have trade deficits with China.”
Gold-mining stocks, however, fell 3 percent, as the price of precious metal eased from record highs as safe-haven demand eased. [GOL/]
Barrick Gold Corp (ABX.TO) lost 2.5 percent to C$45.86, while Goldcorp Inc (G.TO) also dropped 2.5 percent to C$45.35.
Crude oil prices pared gains after bouncing to a 6-1/2-week high, and natural gas prices slid, but energy shares settled 0.2 percent higher. [O/R]
Suncor Energy (SU.TO) was up 0.3 percent at C$34.54, while EnCana Corp (ECA.TO) was flat at C$35.24.
“I think a lot of China moving to a more flexible currency was pretty much priced in so you’re seeing a lot of profit-taking on the big pop today,” said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management in Vancouver.
China’s weekend announcement that it will allow its currency, the yuan, to rise was seen as a signal of confidence in its economy, while fending off criticism that the yuan is undervalued, giving its exports an unfair advantage in trade.
Commodity prices had pushed higher as the move was expected to increase the purchasing power of Chinese importers and create higher demand in the global economy, which encouraged investors globally to buy risky assets.
But as the day progressed, investors expressed some uncertainty about what direction China’s currency will take.
“The flexibility works both ways. It could revalue on the upside but it could also revalue on the downside,” Zohny said.
“And it looks like it’s more of a political move than an actual move, and time will really tell on that one.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed 8.49 points, or 0.07 percent, higher at 11,936.08. Eight of the TSX’s 10 main groups were higher, including the heavily weighted financial sector, up 0.7 percent.
In individual company news, shares of Biovail Corp BVF.TO BVF.N rallied 14.5 percent to C$17.02 after Canada’s biggest publicly traded drugmaker said it will buy U.S.-based Valeant Pharmaceuticals International (VRX.N) in a deal worth roughly $3 billion. [ID:nSGE65K07S].
Shares of Research In Motion RIM.TO fell 2.9 percent to C$60.31 after Goldman Sachs reiterated its “sell” rating on the company, citing an increased risk of the BlackBerry maker posting weaker-than-expected quarterly results later this week.
($1=$1.02 Canadian) (Editing by Peter Galloway; editing by Peter Galloway)