TSX ends at 16-month high as resource stocks shine

TORONTO (Reuters) - Canada’s main stock index closed at its highest since June 2015 on Wednesday, led by energy and mining companies, as oil surged and gold rose, while financial stocks also gained ground.

A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch

The index has rebounded nearly 29 percent since falling to a three-year low in January but had been unable to reach new highs since August.

“As long as you have the economy continuing to do OK and you have a bid on the energy side and a stabilization of oil prices, I think there is room for the market to head higher into year end,” said Bryden Teich, portfolio manager at Avenue Investment Management.

The Toronto Stock Exchange’s S&P/TSX composite index closed up 88.24 points, or 0.60 percent, at 14,840.49, its highest finish since June 25, 2015.

The gains for the index came as the Bank of Canada cut its growth forecast and said it actively discussed adding more monetary stimulus to speed up the nation’s economic.

The energy group rose 1.7 percent as U.S. crude oil climbed to a 15-month high.

Enbridge Inc, Canada’s largest pipeline company, rose 1.1 percent to C$58.79. It is laying off 5 percent of its work force after an organizational review, a spokeswoman said.

Suncor Energy Inc rose 1.1 percent to C$38.38 and Encana Corp added 3.1 percent to C$15.06, while U.S. crude prices settled up $1.31 at $51.60 a barrel as the government reported a drop in domestic inventories for the sixth week out of seven. [O/R]

Higher oil prices support Canada’s economy and give a lift to other sectors of the TSX, including financials, Teich said.

Financials rose 0.2 percent, helped also by positive earnings momentum from U.S. financials, said Teich.

The materials group, which includes precious and base metals miners and fertilizer companies, added 1.8 percent.

Goldcorp Inc rose 3.2 percent to C$20.11, while Barrick Gold Corp was up 5.7 percent at C$22.69.

Spot gold firmed 0.5 percent amid uncertainty around the timing of a U.S. interest rate increase. [GOL/]

Seven of the index’s 10 main groups were higher, with industrials down 0.5 percent.

Canadian Pacific Railway Ltd declined 1.9 percent to C$197.41 after the railroad, the country’s second largest, reported a 9.1 percent drop in quarterly revenue, mainly because of a delayed grain harvest and lower crude oil volumes.

Editing by Diane Craft and Steve Orlofsky