CANADA STOCKS-TSX jumps 1 pct on China cash, Spain hopes

Thu Sep 27, 2012 2:00pm EDT

* TSX up 112.68 points, or 0.92 percent, at 12,345.54
    * China central bank injection helps sentiment
    * Investors bet that Spain will seek bailout

    By Alastair Sharp
    TORONTO, Sept 27 (Reuters) - Canada's main stock index
jumped 1 percent on Thursday, breaking a five-day fall, as
investors cheered moves by China to inject cash into money
markets and as Spain unveiled an economic reform plan to deal
with its debt crisis.
    All ten of the index's main sectors moved higher, led by the
heavyweight materials, energy and financial sectors which
together account for more than three-quarters of the Toronto
Stock Exchange's S&P/TSX composite index.
    By 1:36 p.m. (1736 GMT), the index was up 112.68 points, or
0.92 percent, at 12,345.54, as stronger gold and copper prices
boosted miners.
    "China is by far the biggest factor in determining commodity
prices. Any news perceived as being positive for the Chinese
economy tends to help commodity prices and therefore the TSX,"
said Elvis Picardo, a strategist at Global Securities in
Vancouver who has recommended clients buy lagging Canadian
commodity stocks for several months.
    China's central bank injected 365 billion yuan ($58 billion)
into money markets this week to prevent a short-term liquidity
crunch at the country's commercial banks. 
    "This injection by China is consequential," said Gareth
Watson, a vice president for investment management and research
at Richardson GMP.
    The news from China offset data showing weak orders for
manufactured goods in the United States, which dimmed the global
recovery outlook. 
    
    BET ON SPANISH BAILOUT
    On Europe, Watson said that investors appeared to be looking
beyond street protests against austerity measures in Spain and
Greece and assuming that Madrid will eventually request an aid
package that would trigger European Central Bank bond-buying.
 
    "The market is looking ahead and finding it very difficult
to believe Spain will go ahead without asking for a bailout, so
we will react today as if it is already in place," Watson said.
    Spain announced a detailed timetable for economic reforms
and a tough 2013 budget based mostly on spending cuts seen by
many as an effort to pre-empt the likely conditions of an
international bailout. 
    Illustrating the broad nature of the Toronto index's rise,
the three gainers with the most impact were a bank, an oil
company and a gold miner.
    Bank of Nova Scotia rose 1.5 percent to C$54.91,
Goldcorp gained 2 percent to C$45.20 and Suncor Energy
 moved 1.3 percent higher to C$32.44.
    But both Watson and Picardo warned that the TSX's rise could
simply be a reaction to a five-day sell-off, and that catalysts
would be scarce until North American jobless data at the end of
next week and corporate earnings season that starts soon after.
    Still, a Reuters poll published on Wednesday showed Canadian
shares are expected to make further gains this year and into the
middle of 2013, as recent stimulus from major central banks is
expected to lift lagging resource stocks. 
    Weighing on the index on Thursday, Enbridge Inc 
dipped 1 percent to C$38.49 after environmental groups sued the
government over the pipeline company's contentious Northern
Gateway pipeline. 
    Research In Motion Ltd dipped 2.9 percent to C$6.68
ahead of its quarterly results due after the close, paring
several days of solid gains for the struggling BlackBerry maker.