TORONTO – The Toronto Stock Exchange was up sharply Tuesday as traders bought up stocks across all sectors on rising hopes that European leaders will strengthen eurozone banks.
The S&P/TSX composite index jumped 259.64 points to 11,848 as traders got back to work after the long Thanksgiving weekend while the TSX Venture Exchange was up 36.09 points to 1,508.59.
The Canadian dollar was ahead 0.72 of a cent from Friday’s close to 97.03 cents US as the pace of home construction picked up sharply last month.
Canada Mortgage and Housing Corp. said housing starts rose to a seasonally adjusted annual rate of 205,900-thousand units. Strength was focused in the Atlantic region, Quebec and British Columbia and concentrated on multiple-unit urban starts such as condos, which increased 14.2 per cent.
U.S. indexes were little changed after markets surged Monday following comments from German Chancellor Angela Merkel and French President Nicolas Sarkozy who said they would finalize a “comprehensive response” to the debt crisis by the end of the month, including a plan to make sure that banks have adequate capital.
Stock markets have been intensely volatile recently on worries that a debt default would trigger a crisis for under-capitalized European banks.
The Dow Jones industrial index was off 30.81 points to 11,402.37 after the blue chip index ran ahead 330 points on Monday.
The Nasdaq composite index gained 11.61 points to 2,577.66 and the S&P 500 index edged 0.38 of a point lower at 1,194.51.
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Meanwhile, traders awaited a vote by Slovakia’s government to approve the expansion of the European Union’s bailout fund for strapped governments. Slovakia is the only country out of 17 using the euro that has yet to approve the measure and there is doubt about what will happen after that country’s coalition leaders failed to agree on a deal to approve the measure.
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The 17 countries that use the euro must all approve expanding the powers of the bailout fund, which is designed to shore up Europe’s defences against the debt crisis.
“It’s a very cumbersome process”, said Chris King, portfolio manager at Morgan, Meighen and Associates.
“I think that the world’s capital markets realize there are so many players involved that it’s very difficult to arrive at a resolution in a timely manner.”
Slovakia’s parliament was set to vote later Tuesday. A Slovakia “no” vote would be a bad signal for already nervous financial markets and likely cause a government crisis.
Failure to pass the measures could delay the implementation of the revamped bailout fund ahead of a summit later this month of European leaders. The changes would allow the fund to buy government bonds and to provide a backstop to European banks.
In other European developments, Greece’s international debt inspectors have completed their review of the government’s reforms. The inspectors from the International Monetary Fund, the European Commission and European Central Bank say that if their conclusions are adopted by the eurozone and the IMF, Athens is likely to receive the next batch of its bailout loans in early November.
Tuesday also marked the start of the third-quarter earnings reporting season with U.S. Aluminum giant Alcoa Inc. set to release results after markets close.
Commodity prices softened after making solid advances Monday. But the TSX energy sector ran up 3.9 per cent, with the November crude contract on the New York Mercantile Exchange down 41 cents at US$85 a barrel after rising about $1.30 Monday. Suncor Inc. (TSX:SU) rose 92 cents to C$28.99 and Canadian Natural Resources (TSX:CNQ) advanced $1.05 to $31.25.
The base metals sector gained 4.2 per cent even as copper prices gave back most of Monday’s advance with the December contract down nine cents to US$3.28 a pound. First Quantum Minerals (TSX:FM) was up 54 cents at C$16.24 and Teck Resources (TSX:TCK.B) rose $1.72 to $35.37.
Railway stocks rose alongside energy and mining issues, with Canadian National Railways (TSX:CNR) gaining $1.35 to $73.61 and Canadian Pacific Railway (TSX:CP) up $1.47 to $53.47.
Financials were also strong as Royal Bank (TSX:RY) moved up 72 cents to $48.02 and CIBC (TSX:CM) climbed $1.51 to $75.01.
Gold stocks were also higher as the December bullion contract in New York declined $4.20 to US$1,666.60 an ounce. Barrick Gold Corp. (TSX:ABX) improved by 50 cents to $48.94 and Kinross Gold Corp. (TSX:K) climbed 13 cents to $14.29.
Asian shares advanced as Japan’s Nikkei rose two per cent, Hong Kong’s Hang Seng shot up 2.4 per cent, South Korea’s Kospi rose 1.6 per cent and Australia’s S&P/ASX 200 added 0.6 per cent.
China’s Shanghai Composite Index rose 0.2 per cent a day after a government investment fund announced it had bought shares in major banks, helping to bolster the country’s sagging stock market.
European bourses were mixed with London’s FTSE 100 index down 0.07 per cent, the Paris CAC 40 lost 0.48 per cent while Frankfurt’s DAX was ahead 0.57 per cent.
In corporate news, BlackBerry users in Europe have experienced problems with their smartphones for a second day. The glitches come after an unexplained problem cut off Internet and messaging services for large numbers of users across Europe, the Middle East and Africa on Monday.
But its shares rose 71 cents to $25.01 after Vic Alboini, chairman and chief executive of Toronto-based RIM shareholder Jaguar Financial Corp., said a total of 12 institutional shareholders which own about eight per cent of RIM stock are calling for changes at the company.
Air Canada (TSX:AC.B) shares dipped three cents to $1.38 as the carrier said it was “evaluating its options” in the face of a possible strike by its 6,800 flight attendants early Thursday. The attendants, represented by the Canadian Union of Public Employees, rejected a deal on the weekend that had been negotiated by CUPE. The flight attendants had also rejected a tentative deal CUPE negotiated with the airline in August.
Shares in engineering company Genivar (TSX:GNV) were up $1.21 to $24 after it said Monday it has bought geomatics and surveying firm Le Groupe Giroux for an undisclosed amount.
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