The Toronto stock market surged Tuesday with a big chunk of the advance coming from shares in PotashCorp after the fertilizer giant rejected a hostile $38.6-billion U.S. bid from Australian natural resources giant BHP Billiton Ltd.
The S&P TSX Composite Index jumped 175.88 points, or 1.5%, to close out the session at 11,728.64
PotashCorp said the offer, worth $130 U.S. per share in cash, is "grossly inadequate" and not in the best interests of its shareholders.
Potash shares jumped $30.38 or 25.9% to $147.61 and up $30.76 to $142.91 U.S. in New York.
The Potash move accounted for as much as one third of the TSX advance as the company is the sixth most heavily weighted on TSX, with a 3.25% weighting on the main index. Royal Bank is the most heavily-weighted TSX stock.
Rival potash producer Agrium was up $2.80 to $71.61.
The TSX base metals sector climbed as investors hoped that other offers would be forthcoming for other resource companies. Taseko Mines rose 21 cents to $4.55 and Quadra FNX Mining was ahead 72 cents, or more than 7%, to $10.99.
Copper prices also helped boost the sector with the September copper contract on the Nymex ahead six cents to $3.34 U.S. a pound. Teck Resources ran ahead $2.12 to $35.94.
Among energy plays, Canadian Natural Resources climbed 81 cents to $34.71 while Suncor Energy gained 49 cents to $33.60.
The tech sector led declines as Research In Motion Ltd. shares fell another $1.31 or 2.5% to $51.71. On Monday, there were reports out of India that RIM had agreed to provide that country’s security agencies with partial access to its BlackBerry instant messaging services by Sept. 1.
A number of countries -- including India, Saudi Arabia and the United Arab Emirates -- have threatened to cut off BlackBerry services unless they get greater access to user data. Its stock is down sharply from the $59.12 level where it started the month.
Elsewhere on the corporate front, Magna International Inc. shares gained $3.96 to $83.60 after it said the Ontario Superior Court has approved its plan to eliminate the company’s dual-class share structure. Opponents of the plan have said it pays Magna founder Frank Stronach too much for giving up his family’s voting control through their multiple-vote shares.
In economic news, Statistics Canada said manufacturing sales edged up 0.1% to $44.8 billion in June, helped by higher receipts for paper, furniture, and chemical products. Economists expected manufacturing shipments to decline 0.5% from the 0.4% initially reported in May.
In another report, the agency said foreign investors acquired $5.4 billion of Canadian securities in June, compared to $23 billion in May. Meanwhile, Canadian investors added $4.0 billion in foreign assets to their portfolios.
The Canadian dollar improved 1.03 cents to 96.80 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups advanced, most notably, metals and mining, which popped 4.7%, materials, progressing 4.4%, and energy, powering 1.5% higher.
The three laggards were information technology, sliding 1%, health-care and gold, off 0.1% each.
The TSX Venture Exchange moved higher by 9.51 points to 1,466.67, while the Nasdaq Canada index decreased 2.10 points to 600.40.
ON WALLSTREET
In New York, stocks rallied Tuesday, pushing the Dow Jones industrial average higher for the year, as investors sidelined their jitters about a slower global economic recovery to focus on strong earnings from Wal-Mart and Home Depot and a few acquisitions.
The Dow Jones industrial average surged 103.84 points, or 1%, to close out at 10,405.85
The S&P 500 index gained 13.16 points to 1,092.54. The tech-rich Nasdaq composite index gathered 27.57 points to 2,209.44
The gains followed a choppy trading day on Wall Street on Monday. The tech-heavy Nasdaq managed to advance, rising about 0.4%, while the Dow and S&P 500 ended little changed.
Investors started the week coming off four consecutive sessions of losses, following a bearish statement from the Federal Reserve a week ago
The Fed's outlook about a slowing economic recovery is still weighing on investors' minds, and Tuesday's gains may just be a pause from that downward trend, said Dan Cook, senior market strategist with Chicago-based brokerage firm IG Markets.
Cook said strong earnings reports from retail powerhouses Wal-Mart and Home Depot helped to drive stocks higher. But, he added, since both companies' profits seemed tied to cost-cutting measures rather an uptick in consumer spending, "it doesn't look like there's much to support taking us too much higher today."
Wal-Mart Stores reported a slightly better-than-expected fiscal second-quarter profit Tuesday, although customers of the world's largest retailer continued to curb spending. Wal-Mart also boosted its full-year guidance. Shares of the retailer were up 1.8%.
Home improvement retailer Home Depot posted a better-than-expected second-quarter profit that rose from a year earlier, but its sales missed forecasts. Home Depot shares gained 4.8%.
Pactiv, the maker of Hefty trash bags, gained more than 5% after agreeing to be acquired by Reynolds Group Holdings, which is a subsidiary of a New Zealand firm, for $6 billion U.S.
General Motors is expected to file for an initial public offering of stock with U.S. securities regulators as early as Tuesday.
On the economic front, a wave of reports, including data on housing and inflation, showed mixed results before the bell.
A report from the Commerce Department showed that housing starts -- that is, the number of new homes starting construction -- rose 1.7% to an annual rate of 546,000 in July. But permits fell 3.1% to an annual rate of 565,000.
Both of these tallies were less than expected. Economists were looking for housing starts to rise to a seasonally-adjusted annual rate of 555,000; building permits were expected to slip to a rate of 573,000.
The Producer Price Index, a measure of wholesale inflation, matched expectations by increasing 0.2% in July, after dropping 0.5% in June.
Treasury prices dipped, raising yields for the benchmark 10-year note to 2.64% from Monday’s 2.58%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil regained 48 cents to $75.72 U.S.
Gold prices added a dollar to $1,227 U.S. an ounce.
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