Stock markets were sharply higher mid-afternoon Tuesday after Bank of Montreal beat earnings expectations and a key measure of U.S. consumer confidence surged.
Toronto's S&P/TSX composite index jumped 216.40 points to end the day at 10,285.90.
Bank of Montreal shares were ahead $2.21 to $43.77 after it said that higher amounts to cover credit losses helped cut profits by 44% to $358 million during the second quarter despite higher net earnings in its personal banking and capital markets divisions.
Provision for credit losses climbed $151 million to $372 million as the Canadian economy works through a severe recession, while the bank announced it is cutting 1,100 jobs.
Stripping out the effect of a charge of $80 million related to still shaky capital markets and $80 million in severance costs, BMO reported adjusted cash earnings per share of 93 cents, ahead of the 91 cents forecast by analysts surveyed by Thomson Reuters. The loan loss provisions were also less than expected.
CIBC, Scotiabank and TD Bank report Thursday while Royal Bank issues earnings on Friday. Those banks were up at least 5.3%.
The TSX energy sector was up as crude losses narrowed. Petro-Canada gained $1.53 to $45.70 while EnCana Corp. improved 88 cents to $59.37.
Shares in Ivanhoe Energy were 19 cents higher to $1.76 after the company won the rights to explore an Amazon oil block.
Vancouver-based Ivanhoe will spend $4 billion U.S. to develop an area that could contain 4.5 billion barrels of extra-heavy crude, Ecuador's state oil company said.
The gold sector was down, as Barrick Gold Corp. faded $1.49 to $41.30.
The base metals sector shook off early losses to move higher as professional services firm Ernst & Young predicted a "severe supply constraint" developing in many metals and minerals, causing prices to jump to new highs.
Earlier, Rio Tinto Ltd., the world's third-largest miner, said it has agreed with Japan's Nippon Steel Corp. to cut its iron ore prices for this year by 33 per cent, foreshadowing a wider industry slump in prices.
Teck Resources advanced a dime to $15.90 and Equinox Minerals ran up 11 cents to $2.39.
Uranium miner Denison Mines Corp. has struck a deal with a syndicate of investment dealers co-led by GMP Securities L.P. and Cormark Securities to sell 40 million common shares at $2.05 each to raise $82 million. Its shares fell 27 cents to $2.12.
Copper and zinc miner HudBay Minerals Inc. has closed its previously announced sale of a 16.7% stake in Lundin Mining Corp. to GMP Securities for $236 million, resulting in a pretax $100-million gain. HudBay shares added eight cents to $7.50 and Lundin slipped three cents to $2.57.
Elsewhere in the financial group, Manulife Financial Corp. shares were ahead 92 cents to $23.02 after it said Monday that it will raise $350 million in an issue of 14 million preferred shares.
Hopeful news emerged from the auto sector, as the Canadian Auto Workers union, almost one month after amending its contract with Chrysler LLC, ratified a cost-saving labour agreement with General Motors Corp. yesterday to protect jobs in a probable June 1 bankruptcy.
The CAW, representing about 9,000 GM hourly workers, approved with 86% of the vote yesterday a deal that freezes pension payments until 2015 and pays new hires less. The United Auto Workers, GM’s U.S. union, will present a tentative labour package to plant-level leaders tomorrow in Detroit. Some locals have already scheduled votes this week.
The Canadian dollar added more than half a cent, to 89.45 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, 10 were in the black, led upward by financials, advancing 4.1%, information technology, ahead 3% and real-estate stocks, gaining 1.5%.
Losers were gold, off 0.8%, utilities, down 0.5%, and materials, sliding 0.3%.
The TSX Venture Exchange regained 0.73 to 1,097.16 while the Nasdaq Canada Index gained 38.49 points to 698.97.
ON WALLSTREET
The Dow Jones Industrials average leaped 196.17 points, to finish the session at 8.473.49.
The S&P 500 index strengthened 23.33 points to 910.33, while the Nasdaq Composite Index barreled ahead 58.42 points, to 1,750.43.
Stocks soared Tuesday, after a report showing consumer confidence hit an eight-month high offset dismal housing news. Tuesday marked the first time the Dow and S&P 500 closed in positive territory since May 18.
The rally was broad based, with 28 of the 30 Dow components advancing. IBM which jumped 3%, led the gainers. Consumer-related names, such as McDonalds and Wal-Mart also advanced.
The consumer confidence reading surged to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improved, the Conference Board reported Tuesday.
The gain is the fourth-largest in the 32-year history of the survey, and the index is at its highest level in eight months. Economists were expecting the index to hit 43.
The index now stands at its highest level since September, when it measured 61.4. But it is still low by historical standards. Economists expressed confidence in the confidence number, but admitted the recovery - though ongoing - will continue to be slow, and to quote one expert, "this is just one number."
Elsewhere on the economic front, a closely-watched index of home prices fell a record 19.1% in the first quarter.
The S&P/CaseShiller Home Price Index, which tracks 20 of the largest housing markets, has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months. It fell 18.2% in the previous quarter.
The fate of General Motors in the U.S., a major uncertainty on Wall Street, may soon become clearer.
The automaker has set a Tuesday deadline for its bondholders to reach a restructuring agreement, a major hurdle GM needs to clear in order to avoid bankruptcy. Shares of GM rose 0.7%.
In other company news, shares of Apple rose 6% after analysts at Morgan Stanley upgraded the iPhone maker's stock.
Treasury prices slipped with the yield on the benchmark 10-year at 3.51%. Treasury prices and yields move in opposite directions.
Oil for July delivery rose 68 cents to settle at $62.45 U.S. a barrel ahead of an OPEC meeting later this week. Traders expect the cartel to leave output unchanged at the meeting. Oil prices have settled above the $60 mark for four straight sessions and are now at a more than six-month high.
COMEX gold for June delivery fell $5.60 to settle at $953.30 U.S. an ounce.
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