Canada's main stock index jumped more than 1% on Monday, led by material and energy stocks as commodity prices rallied on hopes that a U.S. budget crisis will be averted.
The S&P/TSX Composite Index closed the day higher by 162.68 points, or 1.4%, to 12,040.40
The Canadian dollar hiked 0.42 to 100.34 cents U.S.
On Sunday, Democrats and Republicans in the States said they could reach a deal to avert the "fiscal cliff," a mix of tax increases and spending cuts starting early in the new year unless there is a deal on Capitol Hill.
Energy stocks leaped, tracking higher oil prices. Suncor Energy Inc was up 3.3% at $32.59 and played the biggest role of any single stock in leading the market higher.
Oil prices rose as rising violence in the Middle East raised concerns over oil supplies.
Goldcorp Inc was up 2.2% at $40.61, and Barrick Gold Corp gained 1.2% to $34.19. That helped the materials group, which includes mining stocks, rise. Gold prices rose as the dollar weakened against a basket of currencies.
Shares of Agrium Inc rose 3.3% to $101.01 after its largest shareholder, Jana Partners, launched a proxy battle and named a slate of nominees to the board of the fertilizer maker.
The financial sector, the biggest on the index, was up, as Royal Bank of Canada was up 1.6% at $56.53, and Bank of Nova Scotia climbed 0.7% to $53.40.
In other company news, shares of Astral Media Inc were up 3.1% to $45.78 after BCE Inc, Canada's biggest telecom provider, said it would seek regulatory approval for a revised $3-billion plan to take over the company.
ON BAYSTREET
The TSX Venture Exchange climbed 14.62 points to 1,249.96
All 14 Toronto subgroups remained positive all day, led by information technology, up 2.2, while gold and materials each gained 2.1%.
ON WALLSTREET
U.S. stocks rallied Monday as investors started the holiday-shortened week optimistic that fiscal cliff negotiations in Washington are progressing.
The Dow Jones Industrials finished the day ahead 207.65 points, or 1.7%, to 12,796, with financial stocks Bank of America and JPMorgan Chase leading the way.
The S&P 500 grew 27.01 points to 1,386.89, and the Nasdaq Composite Index gained 62.94 points to 2,916.07
Technology stocks were also big gainers, with Apple jumping 6%.
Shares of Intel flipped between small gains and losses after the company said CEO Paul Otellini will retire in May. The board of directors will conduct a search for his successor.
Shares of Lowe's gained ground after the home improvement retailer reported better-than-expected earnings of 40 cents a share on sales of $12.1 billion U.S.
Nokia shares jumped on reports that the Lumia 920 sold out in Germany, and shares of Best Buy jumped on a report that the retailer might consider a lower buyout bid from founder Richard Schulze. Best Buy is due to report earnings before the market opens Tuesday.
Tyson Foods shares surged after meat company's outlook topped expectations. The company's chicken business also returned to profitability during the third quarter.
Shares of Lions Gate Entertainment, the movie studio behind the Twilight series, were down slightly even though "Twilight: Breaking Dawn Part 2" raked in $141.3 million U.S. during its opening weekend. It's the fourth movie this year to open above the $140-million U.S. mark. Movie theater chains Regal Entertainment Group, Cinemark Holdings and Carmike Cinemas got a lift.
Trading could be choppy this week as investors try to position themselves ahead of the Thanksgiving holiday. Markets will be closed Thursday and have a shortened day Friday
Dealing with the economy, two better-than-expected reports on the housing market also gave markets a lift. Existing home sales rose 2.1% to an annual rate of 4.79 million in October, despite the impact of Superstorm Sandy.
That compares with analysts' estimates for a rate of 4.70 million. And the National Association of Home Builders' sentiment index rose for a seventh straight month to 46, its highest level since May 2006. Analysts were expecting a reading of 42.
The price on the benchmark 10-year U.S. Treasury fell sharply, lifting yields to 1.61% from Friday’s 1.57%. Treasury prices and yields move in opposite directions.
Oil prices jumped $2.25 to $89.17 U.S. a barrel.
Gold prices added $16.70 an ounce to $1,731.40 U.S.
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