CANADA STOCKS-TSX surges as Greek deal boosts mining, energy shares

Tue Feb 21, 2012 11:30am EST

* TSX up 139.89 pts, or 1.1 pct, at 12,598.19

* Highest level since Feb 3

* Greek debt deal lifts risk appetite

* Domestic economic data mixed

By Jon Cook

TORONTO, Feb 21 (Reuters) - Canada's main stock index was sharply higher on Tuesday morning as mining and energy issues surged after euro zone finance ministers sealed a bailout package for Greece, overshadowing weak Canadian retail sales data.

European officials finalized a 130 billion euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and for private bondholders to accept deeper losses.

The deal means Greece will not default on 14.5 billion euro in bond redemptions due on March 20.

"It's good news in that there was the possibility that things could have fallen apart and nobody knew exactly what that would mean if they were to miss the bond payments," said Carlos Leitao, chief economist at Laurentian Bank Securities.

"This is just the end of Act 5 in the Greek drama, there will be other acts to follow."

The Greek euphoria overshadowed some mixed Canadian data on Tuesday that showed retail sales dropped for the first time in five months in December, though wholesale trade rose for in the final month of last year.

By 11 a.m. (1600 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 139.89 points, or 1.1 percent, at 12,598.19, its highest level in more than two weeks.

Nearly all of the TSX's 10 main sectors were higher, led by the heavily weighted materials group, which gained more than 2 percent.

Gold miners led the way, with Barrick Gold up 3 percent at C$48.26 as the world's top gold miner rode higher bullion prices. Goldcorp climbed 2.5 percent to C$47.96 and Yamana Gold Inc jumped nearly 5 percent to C$17.20.

Base metal miners were also boosted as news of the Greek deal increased investor appetite for risky assets such as industrial metals. Gains were led by First Quantum Minerals, up 4.2 percent at C$23.17, and Teck Resources , which rose 2.7 percent to C$39.34.

Potash Corp, the world's largest fertilizer producer, climbed 2 percent to C$46.87 on hopes that a more stable European economy would help global demand.

Energy shares also pushed above 1 percent as oil prices rose on increased euro zone optimism and on increased sanctions against Iran.

Suncor Energy was the most influential gainer, rising 2 percent to C$34.82.

Oil and gas minnow Flint Energy saw its share price spike 66 percent to C$9.88 after U.S. engineering company URS Corp said on Monday it will buy the oilfield services company for C$1.25 billion ($1.25 billion) in cash.

Financial stocks lagged the broader index's gains, but still climbed 0.7 percent. Toronto-Dominion Bank led the group's gains, rising 0.8 percent to C$79.15.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.