TSX reverses course, closes higher as bargain hunting propels gains

TORONTO — The Toronto stock market staged a stunning turnaround Wednesday as bargain hunters moved in mid-afternoon, enabling the TSX to overcome a plunge of almost 200 points to close higher.

The market had been in a deep funk ahead of a gathering of European Union leaders. Traders were skeptical the leaders could come up with a plan to contain the eurozone debt crisis.

The S&P/TSX composite index closed up 113.01 points to 11,564.8, led by a sharp gain in mining shares even as prices for oil and copper hit fresh, multi-month lows.

“You can only go down so far and then all of a sudden, some group looks at this and says stocks are down at the area where they’re attractive,” said Fred Ketchen, manager of equity trading at Scotia Capital.

The TSX Venture Exchange climbed 9.73 points to 1,256.48.

The Canadian dollar was also off the worst levels of the session, down 0.23 of a cent to US97.64 cents. It had earlier moved as low as US97.13 cents, its lowest level since December, as investors sought safety in U.S. Treasuries and avoided riskier trades such as stocks, commodities and resource-based currencies like the loonie.

The currency failed to benefit from a retail sales report for March that met expectations. Statistics Canada said retail sales rose 0.4% to $39.1 billion in March, more than offsetting a decline in February.

U.S. markets had also been deep in the red on mounting worries that Greece will be forced to exit the eurozone but closed well off the worst levels of the session. The Dow Jones industrial average slipped 6.66 points to 12,496.15.

The Nasdaq composite index gained 11.04 points to 2,850.12 and the S&P 500 index was ahead 2.23 points at 1,318.86.

The TSX has had a dreadful month on worries about the eurozone and a slowing global economy. The main index is down 9.2% from its highs of late February and down 6.2% for this month alone on worries about the eurozone and a slowing global economy.

“Europe is the problem,” added Mr. Ketchen, “and Europe will remain a big problem until they get their heads straightened out and grow up and become mature in their attitude toward their own economies and that of their own region.”

Bullion prices also continued to retreat, down another $28.20 to US$1,548.40 an ounce but the gold sector jumped about 4.5% and Goldcorp Inc. ran up $2.50 to C$38.40.

A higher U.S. dollar has also pressured commodity prices. A stronger greenback usually helps depress prices for oil and metals, which are denominated in dollars, as it makes those commodities more expensive for holders of other currencies.

The base metals sector was up 3.22% even as the July copper contract on the Nymex dropped nine cents to US$3.40 a pound — down 11% this month and its lowest level since the end of 2011. Teck Resources gained $1.48 to C$31.46.

The energy sector gained 0.65% as the July crude contract on the New York Mercantile Exchange declined $1.95 to US$89.90, its lowest close since last October and down from US$106 at the end of April. Canadian Natural Resources climbed 45 cents to $31.45.

Bank of Montreal kicked off the big banks’ earnings season with profits that beat expectations. BMO’s second-quarter net income was up 27% from the same time last year, rising by $215 million to nearly $1.03 billion. After adjustments, BMO’s net income was $982 million or $1.44 per share, eight cents higher than expectations. Its shares shed early losses to advance 81 cents to $56.06.

Facebook shares were higher after two days of sharp losses in the wake of its trading debut Friday. Its stock, originally priced at US$38, was up $1 to US$32 after falling almost 9% Tuesday.

[Canada.com]