Roundup: Canadian stocks rally on positive U.S. data

February 17, 2012 9:14 am 

TORONTO, Feb. 17 — The Canadian stock market was higher on Thursday as positive U.S. economic data helped traders balance doubts as to whether Greece will get the bailout money needed to head off bankruptcy and the possibility of downgrades involving some of the world's biggest banks, including Royal Bank of Canada.

The S&P/TSX Composite Index rose 123.88 points, or 0.06 percent, to close at 12,362.03 while the S&P/TSX Venture Composite Index gained 3.55 points, or 0.22 percent, at 1,633.58.

Moody's Investors Service said it may lower the ratings of some of the world's largest banks as well as those of some securities firms because their long-term prospects for profitability and growth are shrinking.

Banks under review for downgrades include Royal bank of Canada, one of the Canada's five biggest banks, Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley.

The announcement comes just days after the ratings agency said that it was cutting the ratings of Italy, Portugal and Spain, partly because of Europe's weakening economy.

Royal Bank of Canada's stock was off 10 percent at 53.36 Canadian dollars.

Investors are gradually reassessing their assumption that Greece will get a bailout worth 130 billion euros and an accompanying 100-billion debt euros writedown by private bondholders.

On Wednesday evening, after a conference call between the 17 euro zone finance ministers, more hurdles were put in front of Greece. One involves the possibility of setting up an account, separate from Greece's general budget that would be dedicated to paying off Greece's massive debt.

But Investors felt relieved by the U.S. economic data, especially the index of manufacturing activity in the Philadelphia area. The Philadelphia Federal Reserve's manufacturing index reached a four-month high of 10.2 in February in further evidence of the continued strength in the manufacturing sector.

The base metals and mining sector led the gainers, up 1.15 percent as the March copper contract approached 0.16 percent to 3.82 U.S. dollars a pound. Teck Resources advanced 2.34 percent to 39.38 Canadian dollars.

The energy sector was up 1.34 percent as the U.S. economic reports pushed the March crude oil contract on the New York Mercantile Exchange ahead 0.51 percent to 102.32 U.S. dollars a barrel. Canadian Natural Resources rose 1.84 percent to 37.07 Canadian dollars.

Canada's third largest insurance giant Sun Life Financial Inc. reported it lost 525 million Canadian dollars in the latest quarter. Its share lost 0.05 percent to 20.88 Canadian dollars.

Economically speaking, Statistics Canada said on Thursday that the Canadian manufacturing sales improved 0.6 percent in December to 49.9 billion Canadian dollars, the fifth hike in six months.

On the currency front, the Canadian dollar improved from early lower levels amid positive U.S. data and rose 0.22 U.S. cents to 100.29 U.S. cents. One U.S. dollar was buying 0.9971 Canadian dollars at 5 p.m. local time (2200 GMT) on Thursday, compared with 0.9993 Canadian dollars on Wednesday. (PNA/Xinhua) DCT/ebp

Comments

Comments are closed.