CANADA STOCKS-TSX extends 2-yr high with broad gains; up 1.9 pct on week

Fri Oct 18, 2013 5:14pm EDT

* Bombardier gains as Chinese firm may double jet order
    * Real estate stocks gain in low-rate environment

    By Alastair Sharp
    TORONTO, Oct 18 (Reuters) - Canada's main stock index capped
a stellar week with further gains on Friday, extending a
two-year peak as industrial and resource stocks gained on data
showing the Chinese economy, the world's second-biggest, grew at
its fastest pace this year.
    Adding to the rosy view for stocks, investors are betting
that the U.S. Federal Reserve will delay trimming its stimulus
measures due to the economic damage inflicted by the partial
U.S. government shutdown that ended on Thursday.
    "A lot of Canadian money managers have been sitting on their
hands watching what's been happening south of the border and,
that having been sorted out, at least in the short term, they
are back in the market," said David Cockfield, managing director
and portfolio manager at Northland Wealth Management.
    "I think this trade deal is encouraging people as well," he
added, referring to the signing of a multibillion-dollar trade
pact between Canada and the European Union. 
    The deal will make Canada the only Group of 8 country to
have preferential access to the world's two largest markets, the
EU and the United States, home to about 800 million people.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 99.73 points, or 0.77 percent, at 13,136.09,
its highest level since July 2011. It gained 1.9 percent on the
week, its best weekly performance since July.
    Air Canada rose 4.6 percent to $5.19. The airline,
which reached a deal to expand its main hub in Toronto, has
risen sharply in recent months amid a major expansion push and
solid traffic growth.
    Investors pushed aircraft maker Bombardier up 1.8
percent to C$5.08 after it said a Chinese company may double its
total order of new jetliners. 
    "No question the worst is over in China. Things have
stabilized and are now on the upswing and that is very important
for worldwide growth," said Barry Schwartz, a portfolio manager
at Baskin Financial Services.
    Third-quarter growth in China, the world's second-biggest
economy, was 7.8 percent from a year ago, its quickest pace for
the year, thanks largely to investment. 
    All of Canada's ten main sectors advanced except materials,
which was weighed down by retreating gold miners. Some of the
biggest gains came from the heavyweight financial and energy
sectors.
    "If you are sitting on a bunch of cash, you probably slide
back into the utilities, the big financials," Northland's
Cockfield said.
    The financial subgroup rose 0.7 percent, powered by Royal
Bank of Canada. The bank rose 1.1 percent to C$69.53,
pushing its market capitalization above C$100 billion, a first
for a Canadian lender.
    RBC, which along with other Canadian banks has been boosted
lately by signs that Canada's housing sector is stabilizing, is
currently Canada's largest publicly traded company.
    Royal, Toronto-Dominion Bank, Bank of Nova Scotia
 and National Bank of Canada all hit record
highs. 
    Baskin's Schwartz said Canada's banks and real estate
investment trusts (REITs) have room to rally further.
    "Interest rates are now back to where they were before the
taper talk, yet the REITs aren't," he said.
    Riocan Real Estate Investment Trust gained 1.6
percent to C$25.75 and Dundee Real Estate Investment Trust
 added 1.6 percent to C$29.52.
    Schwartz said that after the distraction of the U.S. debt
crisis, investors should be focused on interest rates, inflation
and stock valuations, and that each factor was looking prime for
improvement in Canada.
    "Stocks are still the shiniest gold coin in a tarnished box
of treasure," he said.
    The heaviest fall belonged to Athabasca Oil Corp,
which plunged 12 percent to C$6.13 after a court ruled that an
aboriginal group could appeal the approval of an oil sands
project.
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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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