CANADA STOCKS-TSX ends year broadly higher, gains 9.6 pct in 2013

Tue Dec 31, 2013 4:40pm EST

* TSX up 40.16 points, or 0.3 percent, on the day
    * Ends 2013 at 13,621.55, a 9.6 percent annual gain
    * Annual gain much smaller than U.S. indices as gold weighs

    By Alastair Sharp
    TORONTO, Dec 31 (Reuters) - Canada's main stock index closed
out 2013 with a broad but modest gain on Tuesday, boosted by
higher miners, banks, railways and energy companies, as
investors looked optimistically ahead to 2014.
    "A nice close, and I think the momentum will probably
continue on January 2nd," said David Cockfield, a portfolio
manager at Northland Wealth Management. 
    "We are looking at people who are buying for 2014, not for
the last of 2013. People who were light on the equity side are
getting themselves into position," he said.
    The rise capped a 9.6 percent gain for the Toronto Stock
Exchange's S&P/TSX composite index in 2013, a far
smaller gain than those notched by the three main U.S. indices.
It was the best annual performance since 2010's rise of more
than 14 percent.
    Much of Canada's lag can be blamed on dismal returns from
mining stocks, which struggled with rising production costs and
volatile prices, while U.S. stocks were more directly boosted by
the U.S. Federal Reserve's massive stimulus program.
    In particular, some of the world's biggest gold miners call
Canada home and have seen their shares fall even further than
the 28 percent decline in bullion this year - its worst drop in
32 years. 
    Barrick Gold Corp has fallen 46 percent this year,
and Goldcorp Inc is down 37 percent. But the pair
reversed Monday's losses in the last session of the year, with
Goldcorp up 3.6 percent at C$23.04 and Barrick gaining 2.6
percent to C$18.67.
    The index as a whole ended up 40.16 points, or 0.3 percent,
at 13,621.55 points, on the back of modest gains in seven of the
index's 10 main sectors. It ended 2012 at 12,433.53.
    Resource stocks, which make up a large chunk of the overall
index, had the biggest positive impact, with Canadian Natural
Resources Ltd up 1 percent at C$35.94 and Suncor Energy
Inc also adding 1 percent, to C$37.24. 
    Bank of Nova Scotia gained 0.3 percent to C$66.43
and Canadian National Railway Co added 0.5 percent to
C$60.56.
    
    HIGHER HOPES FOR 2014
    The Canadian stock market may deliver its best performance
in four years in 2014 as a global economic recovery gathers
steam, driving up sagging commodity prices and natural resource
shares, a Reuters poll found in mid-December. 
    With Europe pulling itself out of a recession, China showing
signs of stabilizing, Japan feeling positive effects of a record
stimulus and the U.S. economy entering higher gear, analysts
expect the global demand outlook to brighten. And the
export-focused Canadian market is seen a beneficiary.
    "You can stick your neck out a little further in this kind
of environment," Northland's Cockfield said. 
    But while a seemingly surer footing for the global economy
has many investors confident that Canada's resource stocks will
lift their game in the next year, some are still ringing a note
of caution.
    "I don't share everybody's enthusiasm for the markets. They
are trading at rarefied levels," said John Ing, president of
Maison Placements Canada, referring to U.S. markets overall and
specific sectors of the Canadian market such as banks.
    He said, however, that gold may have a chance to shine again
as interest rates on longer-dated bonds rise on the Fed's
just-started withdrawal of stimulus that has supported equities
for several years. 
    "The byproduct of higher interest rates will be volatility
in the market and a return to risk assets, and that's where gold
does well."
    The technology sector, a much smaller piece of the pie, also
sank this year, as once world-beating smartphone maker
BlackBerry Ltd shed more than a third of its value amid
massive losses and an aborted attempt to sell itself.
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