* TSX rises 1.09 percent to 10,907.86.
* Bank of Montreal results top forecasts, other banks rise
* U.S. data supports view of stabilizing economy
By Ka Yan Ng
TORONTO, Aug 25 (Reuters) - Toronto’s main stock index shot higher on Tuesday morning on a positive start to this week’s raft of quarterly banking results and further data pointing to a recovering U.S. economy.
Bank of Montreal (BMO.TO), Canada’s fourth-largest bank kicked off third-quarter earnings season for the nation’s big five lenders with a surprisingly solid performance, defying investors who had spent the last week selling its shares. [ID:nN24133906].
The results bode well for the rest of country’s banks this week and lifted the hefty financials group 2.54 percent. Bank of Montreal was up 5 percent at C$51.43.
All the large lenders were among the top 10 most influential movers of the session so far, led by the biggest bank, Royal Bank of Canada (RY.TO), which was up 3.1 percent at C$52.25. Insurers were also strong performers, including Manulife Financial (MFC.TO), up 3 percent at C$23.06.
“Bank of Montreal surprised everyone towards the higher end of estimates,” said Michael Sprung, president of Sprung & Co. Investment Counsel.
“A lot of people were concerned that we might see a lot of writeoffs with respect to commercial real estate and perhaps those writeoffs are being deferred into the fourth quarter now,” Sprung said. “On the positive side, credit quality was holding up better than anticipated in terms of provisions for losses.”
At 10:35 a.m. (1435 GMT), the S&P/TSX composite index .GSPTSE was up 117.89 points, or 1.09 percent, at 10,907.86. Nine of its 10 groups were higher, including the heavily weighted resource-linked sectors.
Rising gold prices pushed the materials group ahead 1.2 percent. Energy shares rose 0.15 percent, but the sector’s gains were tempered by a slightly lower price for crude.
U.S. data also buoyed market sentiment, as more signs emerged that the economy was stabilizing. U.S. home prices rose a second straight month in June, [ID:nNYS005335] while consumer confidence for August climbed more than expected to its highest level since May. [ID:nN25200381]
News that Ben Bernanke will be renominated as chairman of the U.S. Federal Reserve for a second term was also well-received. [ID:nLP233065]
$1=$1.08 Canadian Editing by Rob Wilson