March 26, 2008 / 9:28 PM / 11 years ago

UPDATE 3-Resource rally pushes Toronto stocks higher

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By Leah Schnurr

TORONTO, March 26 (Reuters) - The Toronto Stock Exchange’s main index pushed higher on Wednesday, driven by a resource rally that offset weak financials and jitters surrounding the buyout of telecom company BCE Inc (BCE.TO).

Climbing prices for oil and gold, key underlying commodities for the resource-heavy TSX, helped propel materials and energy shares higher.

Potash Corp of Saskatchewan POT.TO jumped C$3.57, or 2.2 percent, to C$162.91, while Canadian Natural Resources (CNQ.TO) added C$2.35, or 3.4 percent, to C$71.41. The energy and materials sectors gained 2.4 percent and 1.9 percent respectively.

But declines in the financial sector held the index back, as the group fell 1.4 percent, again stung by uncertainty over tightness in credit markets.

“It’s a pretty dichotomous market — it’s the ‘haves’ versus the ‘have nots’,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“The ‘haves’ are the ones with the hard assets and the ‘have nots’ are the ones with the invisible assets, or hard to value assets, which is sort of the financial services sector.”

The S&P/TSX composite index .GSPTSE closed up 69.64 points, or 0.52 percent, at 13,391.86 with half its 10 main sectors on the upside.

Bank of Montreal (BMO.TO) was down C$1.93, or 4.1 percent, at C$45.00 and Royal Bank of Canada (RY.TO) slid C$1.20, or 2.5 percent, to C$47.43.

“The banks had a nice bounce-back, but I think there’s still some questions about their earnings and earnings potential, and what’s on their balance sheets,” said Nakamoto.

Troubles in credit markets were underscored by news that the $20 billion leveraged buyout of U.S. radio operator Clear Channel Communications (CCU.N) could be in jeopardy.

The Clear Channel woes were bad news for BCE, as investors worried that its buyout, which is being funded by some of the same banks involved with the Clear Channel deal, could be on shaky ground.

The group of private equity investors buying BCE said it expects the banks financing the deal to live up to their commitments, but shares of BCE ended down 97 Canadian cents, or 2.6 percent, at C$35.72.

AGF Management (AGFb.TO) swam against the financial sector’s retreating tide after it said its first-quarter profit rose and boosted its dividend by 25 percent. AGF gained 55 Canadian cents, or 2.7 percent, to C$20.87.

Inmet Mining IMN.TO dipped 57 Canadian cents, or 0.7 percent, to C$77.07 after it said its Cerattepe copper project in Turkey had been halted after a court granted an injunction against further work at the site.

It was Bay Street’s fourth strong day in a row, in a rally that has seen the TSX composite run up more than 5 percent since the end of last week.

Market volume was a hefty 444 million shares worth C$9.3 billion. Advancers outpaced decliners 835 to 775. The blue chip S&P/TSX 60 index .TSE60 closed up 3.45 points, or 0.44 percent, at 786.19.

Credit worries and gloomy economic data hit U.S. stocks, with bank stocks tumbling after a prominent analyst lowered her first-quarter profit forecast for some major U.S. financial institutions.

The Dow Jones industrial average .DJI was down 109.74 points, or 0.88 percent, at 12,422.86, and the Nasdaq composite index .IXIC slipped 16.69 points, or 0.71 percent, to 2,324.36.

$1=$1.02 Canadian Editing by Rob Wilson

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