CANADA STOCKS-TSX rallies on U.S. budget optimism

Mon Nov 19, 2012 4:55pm EST

* TSX ends up 162.68 points, or 1.4 percent, at 12,040.40
    * Materials, energy stocks make biggest move
    * Suncor Energy up over 3 percent
    * Nexen, Progress fall after PM's remarks

    By Claire Sibonney
    TORONTO, Nov 19 (Reuters) - Canada's main stock index jumped
more than 1 percent on Monday, led by material and energy stocks
as commodity prices advanced on hopes that a U.S. budget crisis
will be averted.
    Over the weekend, leading Democratic and Republican
lawmakers expressed confidence that they could reach a deal to
avert the "fiscal cliff", a mix of tax increases and spending
cuts starting early in the new year unless there is a deal on
Capitol Hill. 
    "We started to see some headlines on Friday about resolving
the fiscal cliff problems that we're facing, and today we're
getting some follow-through on that front," said Levente Mady,
senior portfolio manager at PI Financial Corp in Vancouver.
    "That's driving not just equities, but commodities and
currencies and the rest of the world really in general," he
said, noting that the U.S. Thanksgiving holiday week has 
historically trended higher. 
    The Toronto Stock Exchange's S&P/TSX composite index
 ended up 162.68 points, or 1.37 percent, at 12,040.40.
All the 10 main sectors on the index were up. 
    Energy stocks rose 1.8 percent, tracking higher oil prices.
Suncor Energy Inc was up 3.3 percent at 32.59 and was
the most influential gainer.
    Oil prices rose more than 2 percent on optimism that a U.S.
budget crisis will be averted and as rising violence in the
Middle East raised concerns over oil supplies.   
    Energy takeover targets Nexen Inc and Progress
Energy Resources bucked the broader trend after
Canada's government signaled different treatment for state-owned
enterprises than for private companies in evaluating whether to
approve foreign investment. Nexen dropped 1.4
percent to C$25.32 and Progress lost 1.9 percent to C$20.05.
    Meanwhile, the materials group, which includes mining
stocks, rose 2.1 percent. Goldcorp Inc was up 2.2 percent
at C$40.61, and Agnico Eagle surged 5.8 percent to
C$55.20. 
    The shares tracked bullion prices up as gold climbed more
than 1 percent, helped by the "fiscal cliff" talks and hopes
Greece would receive more funding. 
    The financial sector, the heaviest on the index, was up 1.1
percent. Royal Bank of Canada gained 1.6 percent at
C$56.53, and Toronto Dominion Bank added 0.9 percent to
C$79.57.
    "If the market senses some (U.S. budget) agreement will be
crafted, it will move," said Irwin Michael, portfolio manager at
ABC Funds.
    "The market was oversold," he said. "If we get any bit of
good news, that will be reflected in the stocks."
    Investors were also encouraged by data that showed an
advance in the U.S. housing sector. U.S. home resales
unexpectedly increased in October, while separate data showed
home-builder sentiment rose to its highest in over six years in
November. 
    In individual company news, shares of Agrium Inc 
rose 3.3 percent to C$101.01 after its largest shareholder, Jana
Partners, launched a proxy battle and named a slate of nominees
to the board of the fertilizer maker. 
    Astral Media Inc was up 3.1 percent to C$45.78
after BCE Inc, Canada's biggest telecom provider, said
it would seek regulatory approval for a revised C$3 billion plan
to take over the company.
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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