The Toronto stock market found lift from the resource sector Tuesday as prices for oil and other commodities rose amid moves by China to encourage economic growth.
But response to an agreement to lend Greece $130-billion (CAN) to avoid a debt default was muted on global equity markets.
The S&P/TSX composite index ran ahead 148.49 points to 12,606.78 while the TSX Venture Exchange jumped 18.22 points to 1,676.36.
The Canadian dollar was down 0.37 of a cent to 100.44 cents (U.S.) after Greece on Monday finally secured its second massive bailout in less than two years.
Traders preferred the safe haven status of U.S. Treasuries on the realization that there are many hurdles still to be cleared and Greece remains burdened with massive amounts of debt even after its private creditors agreed to a huge writedown of debt. The prevailing view in the markets is that Greece remains insolvent and that its debt crisis still has a few more chapters to run.
“If you look broadly at what the deal does, it's more of a can-kicking exercise than actual resolution but we didn't expect anything different,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“It's not going to solve the long-term issues. The long term issues are really about reducing structural government debt levels to sustainable positions. What this does is it buys time.”
U.S. markets were higher while the Dow Jones industrial average cracked the 13,000-mark, a level not seen since May 2008, before a financial crisis brought the U.S. economy to its knees. The blue chip barometer later backed off slightly and was 47 points higher to 12,996.87.
The Nasdaq composite index was ahead 10.11 points to 2,961.89 and the S&P 500 index rose 5.18 points to 1,366.41.
Commodity prices advanced after China's central bank moved over the weekend to cut banks' reserve ratios to encourage lending. The People's Bank of China said that it will reduce the proportion of cash that banks must set aside by half a percentage point to 20.5 per cent from Feb. 24.
The bank had moved repeatedly over the last couple of years to tighten lending requirements in order to slow the economy to get a grip on high inflation.
“When we get a data point or any reports that show that growth out of China and thus the demand for commodities and raw materials is going to get increased, that is going to have a proportional benefit to the TSX relative to some of those other markets,” added Fehr.
Traders also took in major acquisition activity.
Calgary-based oil and gas contractor Flint Energy Services Ltd. (TSX:FES) said Monday it is being bought by U.S. engineering and construction giant URS Corp. for $1.25-billion in cash, a 68 per cent premium to Flint's closing price Friday on the TSX. The deal reflects booming growth in Alberta's oilsands and North American shale gas and its shares jumped $9.87 to $24.77.
And on Tuesday, Newfoundland-based power company Fortis Inc. (TSX:FTS) said it is buying New York state utility CH Energy Group Inc. in a cash and debt deal worth US$1.5-billion. Fortis shares dipped 16 cents to $32.69.
Prices for oil and metals advanced as the March crude contract on the New York Mercantile Exchange gained $1.39 to $104.63 (U.S.) a barrel. The TSX energy sector gained 1.2 per cent and Suncor Energy (TSX:SU) was up 64 cents to $34.78 and Cenovus Energy (TSX:CVE) advanced 77 cents to $39.50.
Other energy service companies advanced in the wake of the Flint Energy deal with Trican Well Service (TSX:TCW) ahead 48 cents to $16.67.
The base metals sector climbed 2.6 per cent as metal prices also climbed with the March copper contract up 11 cents to $3.82 (U.S.) a pound. China is the world's biggest consumer of the metal, which is known as an economic barometer because it is used in so many businesses. Teck Resources (TSX:TCK.B) gained $1.05 to $39.35 and HudBay Minerals (TSX:HBM) gained 21 cents to $12.05.
April bullion was ahead $30.10 to $1,756 (U.S.) an ounce and the gold sector jumped 2.45 per cent. Barrick Gold Corp. (TSX:ABX) was ahead $1.42 to $48.25 while Goldcorp Inc. (TSX:G) improved by $1.16 to $47.97.
On the economic calendar, Statistics Canada said retail sales edged down 0.2 per cent in December to $38.6-billion, following four consecutive monthly increases.
The agency also reported that wholesale trade rose 0.9 per cent in December to $49.6-billion, the seventh increase in the last eight months of the year.
Meanwhile, the feeling that the Greek deal merely buys time pushed European bourses lower.
London's FTSE 100 index lost 0.16 per cent, Frankfurt's DAX fell 0.54 per cent and the Paris CAC 40 was down 0.21 per cent.
Traders also took in major earnings news from the U.S.
Wal-Mart Stores Inc. reported a 4.2 per cent decline in fourth-quarter profits to $5.16-billion (U.S.) or $1.50 a share. Net sales rose 5.9 per cent to $122.28-billion. Its shares fell 3.95 per cent to $60.02 (U.S.).
Home Depot Inc.’s fiscal fourth-quarter net income rose 32 per cent to $774-million (U.S.) or 50 cents a share. Quarterly revenue increased six per cent to $16.01-billion.
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