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The favorable Greek election and tentative steps towards a banking and fiscal union demonstrate that the public and political will for an integrated Europe is remarkably unbowed. (ALEX DOMANSKI/REUTERS)
The favorable Greek election and tentative steps towards a banking and fiscal union demonstrate that the public and political will for an integrated Europe is remarkably unbowed. (ALEX DOMANSKI/REUTERS)

The close: European markets surge Add to ...

A pledge by Europe’s top central banker to do whatever it takes to save the euro lit a fire under global equity markets.

Shares in Toronto lagged some of the sharper moves in foreign markets, but the S&P TSX composite index closed the session near the day’s best level, rallying 147 points or 1.3 per cent to 11,640. All 10 sectors closed in the black, led by energy and materials stock.

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The largest gains were in Europe, where signs that the European Central Bank would take steps to combat the sovereign debt crisis led to buying panics in hard-hit Italy and Spain, which soared 5.6 per cent and 6.1 per cent respectively.

Stocks in New York popped higher at the opening and held the strong gains throughout the session The Dow Jones industrial average surged 1.7 per cent, also aided by better-than-expected drop in first time jobless claims figures that hinted at improvements in the U.S. labour market.

Stocks took flight from the get go after favourable comments before the North American open from ECB president Mario Draghi, who said he’d do everything within the central bank’s mandate to safeguard the euro.

The remarks “look to have been the main catalyst for today’s move,” said Michael Hewson, senior market analyst at CMC Markets.

Many market players are hoping that the ECB will buy bonds of countries like Italy and Spain to reduce the upward pressure on their borrowing costs.

Mr. Hewson cautioned that the bank has yet to announce any firm steps and investors will be focusing on next week ECB rate meeting “to see if he means what he says.”

Turning to individual stocks, most gold producers surged higher in Toronto, rallying with a rise in the price of bullion. Gold traded at $1,616 (U.S.), up $11.20 in late day trading.

An exception were shares of Barrick Gold Corp., which sagged 4.2 per cent after the company, the world’s largest producer, announced a huge cost overrun at a mine it is developing in Chile.

Mid-tier gold producer Agnico-Eagle Mines Ltd. advanced 7.6 per cent. The company increased its guidance for annual production this year to 975,000 ounces from a previous range of 875,000 to 950,000.

Potash Corp. of Saskatchewan Inc. gave an upbeat assessment for fertilizer demand due to higher food prices. The shares gained 0.6 per cent.

Energy producers strengthen in response to higher oil prices. Crude settled at $89.45 a barrel in late trade, up 48 cents.

Suncor Energy Inc. gained 3.2 per cent, Encana Corp. 1.3 per cent and Imperial Oil Ltd. 0.9 per cent.

 
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