CANADA STOCKS-TSX rises as growth hopes overcome U.S. rate hike fear

Thu Mar 20, 2014 11:23am EDT

* TSX firms as central bank comments digested
    * Financials lead pack; gold miners and industrials slip

    By Alastair Sharp
    TORONTO, March 20 (Reuters) - Canada's main stock index
turned higher after a sluggish start on Thursday as investors
sought direction from recent comments from the Canadian and U.S.
central banks.
    On Tuesday, Bank of Canada Governor Stephen Poloz warned
about a prolonged period of sluggish growth and low interest
rates.    
    But on Wednesday, U.S. Federal Reserve Chair Janet Yellen
raised the specter of an earlier-than-expected increase in
interest rates in Canada's largest trade partner, providing both
optimists and pessimists with ammunition as the U.S. economic
recovery hangs in the balance.
    U.S. equities have hit record highs during an extended
period of low interest rates and monetary stimulus that appears
to be coming to an end, but talk about higher rates also signals
that the Fed expects the U.S. economy to expand.
    "You would anticipate, all other things being equal, that
Canada is going to do OK and even maybe quite well because if
they (the U.S.) are doing well they are going to need more of
the stuff we make and produce," Gavin Graham, chief strategy
officer at Integris Pension Management Corp.
    Canada's stock market is dominated by natural
resource-related companies, some of the largest of which took a
hit in early trade.
    "Gold is taking a hit because it's felt there's less need
for disaster insurance," Graham said. "But it's also some of the
economically sensitive stocks like oil and gas, the rails, some
of the pipeline stocks as well."
    Canadian Pacific Railway Ltd lost 1 percent to
C$171.25 and pipeline company TransCanada Corp slipped
0.3 percent to C$50.13.
    The financial sector, another big hitter on the Toronto
stock market's benchmark index, offset those losses, however. In
the group, Manulife Financial Corp was up 1.8 percent
at C$21.43 and Sun Life Financial Inc added 1.4 percent
to C$38.82.
    The Toronto Stock Exchange's S&P/TSX composite index
 was up 30.51 points, or 0.21 percent, at 14,364.51 at
midmorning after opening lower. Four of its 10 main sectors were
 in the red.
    ($1=$1.13 Canadian)

 (Reporting by Alastair Sharp; Editing by Peter Galloway)
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