North American stock markets shook off early losses this afternoon following dramatic moves by the U.S. Federal Reserve to unclog credit markets.
Toronto's S&P/TSX composite index posted its seventh straight gain, picking up 76.08 points to 8,635.68.
The rally has been especially beneficial for the financial sector, which has soared 28% over the six days, sparked by news that American banks Citigroup and Bank of America were profitable in the first two months of this year.
Even so, the upturn still leaves the TSX down about 7% year-to-date and analysts point out that worsening economic fundamentals do not bode well for stock markets in the near term.
The energy sector was lower as EnCana Corp. stepped back 99 cents to $50.51 while Suncor Inc. moved down $1.75 to $31.50.
Libya's National Oil Company says it will buy Canada's Verenex Energy Inc., matching a $394-million U.S. bid by a subsidiary of the China National Petroleum Corp, although the Calgary company says it hasn't been able to confirm the report.
Verenex has operations in Libya's Area-47, a region estimated to hold roughly 2.15 billion barrels in crude oil reserves. Its shares dipped 65 cents to $8.67 Canadian.
The TSX financial sector mended early losses and was flat following the Fed announcement with TD Bank down $1.19 to $42.34 while Manulife Financial gained 74 cents to $14.54.
The gold sector was up, as Barrick Gold Corp. was ahead 98 cents to $37.59.
Allied Nevada Gold Corp., which is working to get the Hycroft project into commercial production, says its annual net loss increased last year to $79.6 million U.S., up from $11.3 million in 2007. The company reported no revenues for last year or the prior year and its shares rose 30 cents at $5.55.
The base metals sector stepped back, as Teck Cominco Ltd. lost 10 cents to $5.15.
Shares in Timminco Ltd. plunged 20 cents or 8.5% to $2.15 after it said Tuesday it will temporarily cut jobs and reduced production of silicon due to difficult market conditions and reduced demand.
Union workers at a Syracuse-area auto parts plant owned by Magna International have again rejected a contract proposal aimed at keeping the money-losing factory open. Magna has said it would accelerate the shutdown of New Process Gear if the offer was rejected. It had briefly halted its "wind-down process" while the union voted on the new offer. Magna shares moved up $1.20 to $30.68.
In Canadian economic news, wholesale sales declined 4.2% to $41.1 billion in January. Statistics Canada said the drop was due largely to lower activity in the automotive products sector.
The Canadian dollar vaulted 1.45 cents to 80.19 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, 10 ended the day higher, gold stocks led the parade, zooming 7.7%, followed by materials, up 5.1%, and information technology, ahead 1.7%.
The three laggards were health-care stocks, off 2.9%, energy, 1.9% to the bad, and telecoms, off 0.5%.
The TSX Venture Exchange was 12.59 points higher at 865.71, while the Nasdaq Canada index was 1.58 points off, at 419.89.
ON WALLSTREET
The Dow Jones Industrials average advanced 90.88 points to 7,486.58. The much-broader S&P 500 strengthened 16.23 points to 794.35, while the tech-laden Nasdaq galloped ahead 29.11 points to 1,491.22.
On the economic front, the Fed says, for starters, it will buy up to $300 billion U.S. in long-term Treasury securities over the next six months.
Many kinds of debt - from mortgages to corporate bonds - are linked to Treasury rates. Fed purchases would boost Treasury prices and drive down their interest rates, hopefully lowering rates on other kinds of debt.
The central bank also will buy more mortgage-backed securities and debt guaranteed by Fannie Mae and Freddie Mac in a move to help that market.
Investors also took in news that U.S. consumer prices rose in February by 0.4%, the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades.
Core inflation, which excludes food and energy, rose 0.2% in February, slightly higher than the 0.1% rise economists expected.
In company news, The Wall Street Journal reported that International Business Machines Corp. is in preliminary talks to buy Sun Microsystems Inc. for at least $6.5 billion U.S. in cash.
IBM and Sun both make computer systems for corporate customers, and the newspaper said a purchase of Sun would help IBM in the finance and telecommunications markets. Sun stock soared $3.95 or 80% to $8.92 U.S. while IBM slipped $1.42 to $91.49 U.S.
Shares of Citigroup and other major financial institutions have been heading higher after top executives said last week that the banks were profitable in the first two months of the year.
Citigroup was up 23% while Bank of America gained 17%.
Bank shares were also pushed higher on speculation that government regulators will modify mark-to-market accounting rules, which could make it easier for financial institutions to sell illiquid assets weighing down their balance sheets.
China has rejected Coca-Cola Co.'s $2.5-billion U.S. bid to buy major China's Huiyuan Juice Group Ltd., in a closely watched case that stirred nationalist opposition to the sale of a successful homegrown brand to foreigners. The Commerce Ministry rejected the purchase on anti-monopoly grounds.
Treasurys surged, after the Fed's announcement, lowering the yield on the benchmark 10-year note to 2.51% from 3.01% Monday. Treasury prices and yields move in opposite directions.
The April crude contract on the New York Mercantile Exchange backed off $1.26 to $47.90 U.S. a barrel
The April bullion contract on the New York Mercantile Exchange moved down $27.70 to $889.10 U.S.
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