TSX rallies 1.3 percent as gold-miners drive gains

TORONTO: Toronto's main stock index climbed more than one percent on Wednesday, clawing back from early losses, as gold-mining shares rallied with the price of bullion, outweighing a sinking financial sector.

The TSX rose even as global stocks slumped on speculation about the strength of French banks holding troubled peripheral euro zone debt that tapped into investors' worst fears about possible contagion from the euro zone debt crisis.

The price of gold rose to a record high, extending its biggest rally since 2008, as anxious investors picked up the safe-haven asset, which helped buoy Toronto's resource-heavy index.

"We've managed to outperform the rest of the planet ... mostly on the precious metals sector," said Francis Campeau, broker at MF Global Canada in Montreal.

"Money is moving out of the banks and into gold stocks or miners."

At 2:32 p.m. (1732 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up, up 161.68 points, or 1.34 percent, at 12,270.94. Seven of the 10 sectors were higher.

The heavy-weight materials sector, which includes miners, was up 3.8 percent, with the gold-mining sub-group adding 4.4 percent.

Barrick Gold topped the list of influential gainers, up 5.5 percent C$49.42, followed by Goldcorp, which added 6 percent to C$49.87.

The energy sector was up 2.22 percent, boosted by rising oil prices. US crude futures rose 4.5 percent after a government report showing oil inventories fell.

Canadian Natural Resources, up 2.9 percent at C$35.78, and Suncor Energy up 1.9 percent at C$31.58, were among the index's top gainers.

Meanwhile, the financial sector sank 0.5 percent as market jitters about the strength of French banks dragged Canada's big banks and insurers lower.

Manulife Financial was the heaviest weight, down 3.3 percent at C$12.76, while Toronto Dominion Bank fell 1 percent to C$74.32.

Copyright Reuters, 2011