TORONTO: Canadian stocks closed stronger on Friday after touching a near two-month high, as gains in the safe-haven gold sector offset the broader drag from fading optimism about Europe's deal to solve its debt crisis.
Toronto stocks had rallied more than 2 percent on Thursday on the initial euphoria about a deal being reached. But a weaker sale of Italian bonds that followed showed investor confidence in the agreement was shaky.
"They (Europe) kicked the can down the road. But it's a very short road and it looks like we're going to be revisiting a lot of the problems so gold stocks have been benefiting," said John Ing, president of Maison Placements Canada.
"Precious metals have been and remain the place to hide."
The materials sector and gold miners were the biggest drivers. With gold on track for its best weekly gain in two months, the Canadian gold mining sector rose 2.3 percent.
Barrick Gold led the sector and broader market higher, jumping 3.9 percent to C$50.50. Goldcorp Inc was also up 3.8 percent to C$49.68.
The Toronto Stock Exchange's S&P/TSX composite index ended up 54.07 points, or 0.4 percent, to 12,519.51. It touched a session high of 12,541.84, its strongest level since Sept. 9.
Further eroding investor optimism, Fitch Ratings called the plan by European policymakers to force banks to take a 50 percent haircut on their holdings of Greek debt a default.
"It's a demonstration of the old (adage) buy the rumor, sell the news," said Gavin Graham, president of Graham Investment Strategy in Toronto. "Now you're starting to see the second thoughts and the closer examination and obviously the market is reflecting that."
Half of the TSX's 10 main sectors were down. Financials were the largest drag, falling 0.5 percent after jumping nearly 3 percent the day before.
The biggest weights on the sector were Manulife Financial Corp, down 1.9 percent to C$13.68, and Sun Life Financial, off 2.3 percent to C$25.22.
In other news, shares of base metal miner Inmet jumped more than 7 percent. The company said talks with parties interested in buying a stake in its Cobre Panama copper project in Central America are continuing and that there has been no dip in interest despite current global economic concerns.
Mosaid Technologies, an Ottawa-based wireless firm that recently acquired about 2,000 patents from Nokia and Microsoft, rose 5.8 percent to C$45.95 on news it will be bought by US private equity firm Sterling Partners for C$590 million ($594 million).
Looking ahead, the market is expected to focus next week on a meeting of the Group of 20 nations in France, as investors try to gauge the willingness of Chinese and US policymakers to continue to support Europe.
"Are the Chinese going to come in and buy a bunch of European bonds? Is the US going to continue to provide the dollar liquidity to the European banking system?," said Graham.
Comments
Comments are closed for this article.