CANADA STOCKS-TSX hits 3-month high on higher grain, gold prices

Mon Aug 26, 2013 11:44am EDT

* TSX rises 38.85 points, or 0.30 percent, to 12,801.15
    * Five of 10 main index sectors climb
    * Potash jumps 3 percent, Agrium up 3.2 percent
    * CIBC, TD gain after companies discuss Aeroplan deal

    By John Tilak and Rod Nickel
    TORONTO, Aug 26 (Reuters) - Canada's main stock index hit a
three-month high on Monday as a jump in grain prices and a gain
in precious metals boosted shares of major fertilizer producers
and gold miners.
    The market overcame data showing orders for long-lasting
U.S. manufactured goods recorded their biggest drop in nearly a
year in July, as well as news that Silvio Berlusconi's
center-right party threatened to bring down the government over
a vote to expel the former prime minister from parliament. 
 
    North American fertilizer producers Potash Corp and
Agrium Inc benefited from a spike in U.S. corn and
soybean futures due to unfavorable hot and dry crop weather.
    Fertilizer stocks traditionally track prices of grain and
oilseeds on the thinking that farmers tend to buy more
fertilizer in periods of high crop prices to maximize
production.
    Potash shares were the biggest contributor to the advance in
the Toronto Stock Exchange's benchmark S&P/TSX composite index
, according to Reuters data. The index was up 38.85
points, or 0.30 percent, at 12,801.15, its highest since May 22.
 
    Potash stock jumped 3 percent to C$32.30; Agrium was up 3.2
percent to C$93.93.
    Investors in the potash sector also digested news that the
head of Russia's largest potash producer, Uralkali OAO
, was detained in Belarus, escalating friction between
the countries after the collapse of a joint sales pact in July.
   
    In the mining sector, Barrick Gold Corp added 2.5
percent to C$21.64, and Goldcorp Inc gained 1.5 percent
to C$33.09 as U.S. gold futures firmed 0.2 percent,
extending their 1.6 percent rally on Friday. 
    Silver prices also rose, helping lift Silver Wheaton
Corp up 4.1 percent to C$30.32.
     The recent recovery in various commodity prices, which took
a tumble earlier this year, has helped the TSX outperform the
S&P 500 in August to date. 
    "It's a reflection of the fact that commodities have started
to come off of their bottom," said Craig Fehr, Canadian market
strategist at Edward Jones in St. Louis, Missouri. "We're
starting to see a little bit of a rebound there."
    Financials, the index's most heavily weighted sector, rose
0.2 percent.
    After Canadian Imperial Bank of Commerce said it was
still in talks to retain about half of its Aeroplan credit card
portfolio after Toronto Dominion Bank replaced it as the
issuer of the popular flight rewards card, shares of both
companies gained. 
    TD was up 0.5 percent at C$89.25, and CIBC added 0.6 percent
to C$80.37.
    Shares of energy companies climbed 0.3 percent. Suncor
Energy Inc added 0.7 percent to C$36.30.
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