The financial sector helped push the Toronto stock market sharply higher Wednesday amid reports that European Union officials are examining plans to help banks manage the fallout for the euro debt crisis.
The S&P/TSX composite index finally reversed course and gained 279.31 points, or 2.5%, to close at 11,457.20
The Canadian dollar gained 0.82 cents to 95.89 cents U.S.
The surge on the TSX followed sharp losses over the past three sessions which left Canada’s biggest stock market in bear market territory, down 22% from its 2011 highs from early March.
In an interview with the Financial Times, European Commissioner Olli Rehn hinted at a possible bank recapitalization plan but didn’t provide any details.
Investors have been concerned over the last couple of months about the slowing pace of the economic revival and a possible debt default by Greece, which could cause havoc on the European financial sector.
However, recapitalizing euro-zone banks could limit the damage to the financial system should the Greek government default.
Still, traders were leery about the bank recapitalization report in light of several disappointments from European leaders since the euro-zone’s debt crisis worsened early in 2010.
The financials sector was up in the wake of the Financial Times report. Royal Bank was up 77 cents to $46.72 and TD Bank rose $1.41 to $72.55.
The energy sector gained as Suncor Energy was up $2.01 to $27.44 and Cenovus Energy gained $1.71 to $32.11.
In the gold sector, Goldcorp Inc. climbed $1.46 to $47.40.
The base metals sector was higher while December copper prices were unchanged at $3.10 U.S. Teck Resources climbed $2.78 to $33.77 and HudBay Minerals was ahead 53 cents to $10.58.
Commodity prices have taken a huge hit since early August when investors started to get concerned that global growth was faltering and there was a growing possibility that economies could slide back into recession.
That in turn has resulted in large losses in energy and mining companies on the resource-heavy TSX as oil prices have slid about 20% in the last two months while copper has plunged 31%.
Copper is widely viewed as a barometer for the health of the overall global economy since it is used in electronics, homes and infrastructure.
On the corporate front, Talisman Energy Inc. lowered its full-year production forecast to about 425,000 barrels of oil per day, down from a previous estimate of 430,000 to 440,000 barrels, as it resumes production at its Rev facility in Norway. Its shares fell 40 cents to $11.75.
Precision Drilling Corporation has signed deals to build eight new rigs for the Canadian and U.S. oil and gas industry. Financial terms of the contracts were not revealed by the big Calgary-based drilling services company. Its shares gained 34 cents to $9.41.
ON BAYSTREET
The TSX Venture Exchange regained 70.31 to 1,403.65, while the Nasdaq Canada index gained 24.92 points to 427.60
All but one of the 14 Toronto subgroups were positive on the day. Metals and mining stocks gained 5.7%, energy stocks picked up 4.4%, and materials were 3.5% to the good.
Only real-estate suffered, and only 0.01% at that.
ON WALLSTREET
In New York, stocks moved higher by late afternoon Wednesday, after straddling breakeven levels throughout the morning. Investors grew more optimistic that European leaders could be moving closer to a resolution of its debt crisis.
The Dow Jones Industrials was positive 131.24 points, or 1.2%, by the closing bell to 10,940. Cisco, Alcoa and Hewlett-Packard were the biggest gainers on the blue-chip index.
The S&P 500 moved into the green 20.08 points to 1,144.03, while the Nasdaq gained 55.69 points to 2,460.51
Yahoo helped propel Nasdaq, after reports appeared that Microsoft might be among the bidders in the company's sale.
The overall focus remains firmly on Europe, however, and investors are closely watching for any news on whether politicians might be amenable to recapitalizing European banks. Talks surrounding a recap intensified Wednesday, and German Chancellor Angela Merkel reiterated her country's commitment to moving swiftly to address problems in Greece.
A late-day U.S. stock rally Tuesday was sparked by a Financial Times report that European leaders were becoming more vocal about the need to recapitalize banks.
Despite some buoyancy in the markets, U.S. bank stocks including Citigroup, Wells Fargo and Goldman Sachs, and Bank of America, JPMorgan Chase and Morgan Stanley traded mostly in negative territory.
Monsanto's shares were higher by mid-afternoon after the company reported a narrower-than-expected loss.
Costco's shares slid after the retailer reported strong same-store sales but profits missed by two cents. Costco also announced an increase in membership fees.
Shares of Apple rebounded Wednesday after dropping Tuesday. Investors signaled disappointment after the tech giant unveiled its newest generation of the iPhone but failed to live up to the hype over expectations of a radically changed iPhone 5.
After the close, hotel operator Marriott will report its quarterly results.
Economically speaking, private sector employers added 91,000 jobs in September, according to payroll processor ADP. Economists had forecast an increase of 45,000 private sector workers in September.
The number of announced layoffs rose 126% in September to 115,730 from August's 51,114, according to outplacement consulting firm Challenger, Gray & Christmas. That's the highest number of planned job cuts since April 2009.
The most important number of the week is Friday's employment report from the U.S. Labor Department. A survey of 22 economists forecasts that the U.S. economy added 65,000 jobs overall, with the unemployment rate expected to remain unchanged at 9.1%.
The price on the benchmark 10-year U.S. Treasurys dove, raising the yield to 1.90% from Tuesday’s 1.78%. Treasury prices and yields move in opposite directions.
Oil for October delivery leaped $4.00 to $79.62 U.S. a barrel.
Gold futures for December delivery jumped $21.20 to $1,637.20 U.S. an ounce.
Related Stories
