CANADA STOCKS-TSX rises with hope for "fiscal cliff" deal

Mon Dec 31, 2012 3:25pm EST

* TSX up 138.77 points, or 1.1 percent, at 12,454.89
    * Materials sector leads index up amid U.S. budget
uncertainty
    * Canpotex deal boosts potash companies


    By Allison Martell
    TORONTO, Dec 31 (Reuters) - Canada's main stock index rose
more than 1 percent on Monday, boosted by the materials sector,
as U.S. lawmakers pushed for a last-minute agreement to avoid
the "fiscal cliff" that could put the U.S. economy into
recession.
    Gold rallied in the afternoon after news of a potential
deal, and held its gains as President Barack Obama said a deal
to prevent the tax hikes and sharp spending cuts was in sight,
but not yet complete.  
    "As always, they leave it to the very last moment, and then
something almost invariably emerges, even if it's not the major,
game-changing plan that they wanted," said Gavin Graham,
president at Graham Investment Strategy.
    Graham said investors were likely buying gold because of
inflation that could follow a resolution of the U.S. budget
dispute. Gold is seen as a hedge against inflation. 
    He said upbeat manufacturing data out of China was also
helping the Canadian market: "It's evident now that China is
emerging from its slowdown."
    That data boosted iron ore and copper prices, and Teck
Resources Ltd, Canada's largest diversified miner, was
an influential gainer on the TSX, rising 3.5 percent to C$36.29.
  
    At 3:00 p.m. (2000 GMT) the Toronto Stock Exchange's S&P/TSX
composite index was up 138.77 points, or 1.1 percent,
at 12,454.89. The index was on track to finish up about 4
percent for the year. 
    "If you're a Canadian and you bought the index, you got
killed by the commodities this year," said David Baskin,
president of Baskin Financial Services. "You got whacked by the
gold stocks."
    Gold miners underperformed in 2012 as soaring operating and
development costs cut into profits despite historically high
gold prices.
    Goldcorp Inc was one of the most influential gainers
in the index on Monday, however, rising 3.5 percent to C$36.68. 
    The heavyweight materials sector rose 2.8 percent overall.
    Financial stocks, which have been rising and falling with
the perceived chances of a U.S. budget deal in recent weeks,
were up 0.4 percent in volatile trading.
    Energy stocks rose 1.3 percent as oil prices edged higher on
optimism about the U.S. budget talks. Suncor Energy Inc 
led the index higher, rising 1.8 percent to C$32.79. 
    Canpotex Ltd, the offshore sales agency for Potash Corp of
Saskatchewan, Mosaic Co and Agrium Inc
, said it struck a six-month agreement to supply a
subsidiary of China's Sinofert Holdings Ltd. Potash
Corp rose 2.0 percent to C$40.52, and Agrium was up 2.0 percent
at C$99.78. 
    The Canadian Imperial Bank of Commerce said it would
pay $149.5 million to the estate of Lehman Brothers Holdings Inc
to resolve litigation over a collateralized debt obligation tied
to the bankruptcy of the former Wall Street bank. Shares fell
0.7 percent to C$80.02, and CIBC was the most influential
negative stock in the index.
FILED UNDER:
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