The Toronto stock market racked up a solid gain mid-afternoon Tuesday as data pointing to strong German investor optimism eased fears that Europe’s biggest economy could be headed into recession.
The S&P/TSX composite index rallied 123.58 points, or 1%, to end the day at 12,810.21
The Canadian dollar stumbled 0.13 to 98.83 cents U.S.
Canada’s Great West Lifeco is buying Irish Life Group for $1.75 billion. Its shares were earlier halted on the TSX but later gained 54 cents to $27.32.
Telecoms led TSX gainers, with Rogers Communications continuing to benefit from a strong earnings report Friday, up $1.17 at $48.49.
The financial sector ran ahead as Royal Bank advanced $1.07 to $64.37.
The information technology sector was ahead as BlackBerry gained 30 cents to $14.53 even as Canaccord Genuity slashed its estimate of BlackBerry BB10 smartphone shipments in February to just 300,000 units, a far cry from its earlier estimate of more than 1.75 million.
The equities research unit of Canaccord Financial Inc. says its global surveys show initial sales have been mixed for the BlackBerry Z10, with limited supply rather than overwhelming demand behind post-launch shortages at some stores. Elsewhere in the sector, Constellation Software was down $4.74, or 4%, to $115.26.
Markets took their cue from Germany’s ZEW institute index, which rose to 48.2 points from 31.5 in January. It was the third monthly increase in a row and above the 36 points expected by market analysts.
The data came as a relief after another economic report last week showed Germany’s economy shrank 0.6% in the fourth quarter. A drop in the first quarter of this year would put it in a technical recession but many economists think the dip was only temporary and that the economy will quickly return to growth.
Prices weakened for oil and copper despite the positive European data.
The energy sector was up as Suncor Energy was ahead 38 cents to $32.13.
Miners led TSX losers with the base metals sector down while copper prices fell sharply after several local governments in China announced new measures to restrict financing to potential homebuyers. That triggered concerns about a fresh wave of tightening for the property sector.
March copper ticked nine cents lower to $3.65 U.S. a pound. China is the biggest consumer of copper, considered an economic bellwether as it is used in so many industries, including electrical and plumbing in houses. HudBay Minerals was off 28 cents to $10.66.
Inmet Mining Corp. will waive application of a shareholder rights plan that was supposed to take effect hours before the Feb. 27 deadline for First Quantum’s hostile $5.1-billion takeover bid.
Inmet said Tuesday that its board is taking the action because it has enough time to review and execute all strategic alternatives being considered. Inmet shares lost $1.37 to $69.10 while First Quantum shares were nine cents lower at $19.93.
The gold sector was down as AuRico Gold Corp. faded 22 cents to $6.60.
On the economic front, Statistics Canada reported that wholesale sales fell 0.9% in December to $49.0 billion, after rising 0.7% in November, mostly because of lower sales in the computer and communications equipment and supplies industries.
The agency also reported this morning that folks from other countries reduced their holdings of Canadian securities by $1.9 billion in December, led by large retirements of bonds and equities. This, as Canadian investors added $5.5 billion of foreign securities to their portfolios, marking four straight months of this upward trend.
ON BAYSTREET
The TSX Venture Exchange lost 13.85 points to 1,171.80
All but four of the 14 Toronto subgroups were higher Tuesday. Telecoms grew 1.5%, while real-estate improved 1.3% and consumer discretionaries bolted 1.2% higher.
The four laggards were weighed mostly by metals and mining, lower by 1.3%, while gold and materials each declined 0.4%.
ON WALLSTREET
The Dow and S&P 500 finished at new five-year highs Tuesday, as investors grew hopeful about a potential merger between OfficeMax and Office Depot.
The Dow Jones Industrial Average added 53.91 points to finish at 14,035.70, its highest level since October 2007.
The S&P 500 index took on 11.15 points to 1,530.94, also its highest close since October 2007. The tech-heavy NASDAQ Composite gained 21.56 points to 3,213.59, to close at its highest level since November 2000.
Driving the gains Tuesday were shares of OfficeMax and Office Depot, which both rallied after media reports said the companies were in advanced merger talks, citing unnamed sources. Staples, the other major office supplies retailer, gained about 13%.
The talks come as mergers and acquisitions have picked up. Just last week, US Airways announced a merger with American Airlines parent AMR, Warren Buffett's Berkshire Hathaway announced it was buying ketchup maker Heinz, and Comcast announced a $16.7-billion U.S. deal for the 49% of NBC Universal that was still owned by General Electric.
Best Buy shares gained almost 3% after the electronics retailer announced late Friday that it plans to make its price-matching program permanent, starting March 3.
Shares of Google rose to a new all-time high of $804 U.S. per share.
Dell and controversial nutritional supplements company Herbalife will announce their quarterly results after the closing bell.
A hearing began Tuesday in David Einhorn's lawsuit against Apple Inc Einhorn's hedge fund, Greenlight Capital has accused Apple of hoarding billions in cash and wants a judge to block a "bundled" shareholder vote, scheduled for Feb. 27. Einhorn wants shareholders to vote separately on an Apple proposal that would limit the company's ability to issue high-yielding preferred stock.
Apple CEO Tim Cook has called the lawsuit a "silly sideshow."
Economically speaking, the National Association of Home Builders's Housing Market index fell for the first time in nearly a year in February. The index slipped to 46 in February, from 47 in January.
Economists were expecting the index to rise to 48, which would have put builder confidence is at a six-year high.
Separate reports on housing starts and building permits will follow on Wednesday, and data on existing home sales will be released Thursday.
Prices on the 10-year U.S. Treasury dropped a bit, raising yields to 2.03% from Friday’s 2.01%. Treasury prices and yields move in opposite directions.
Oil prices hiked 83 cents to $96.67 U.S. a barrel.
Gold prices dipped $5.10 to $1,604.40 U.S. an ounce.
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