The Toronto stock market surged more than 200 points Tuesday and commodity prices registered solid gains amid hopes that central banks will take action to keep the fragile global economic recovery on track.
The S&P/TSX composite index jumped 221.76 points to 11,818.32 while the TSX Venture Exchange gained 20.72 points to 1,211.71.
The Canadian dollar rose 0.31 of a cent to 98.53 cents (U.S.).
New York markets were little changed amid a shortened session. They were open for a half-day Tuesday and closed Wednesday for the U.S. Independence Day holiday.
The Dow Jones industrials added 2.31 points to 12,873.7, the Nasdaq composite index gained 0.52 of a point to 2,951.75 and the S&P 500 index was up 1.09 points to 1,366.6.
Some analysts expect the European Central Bank to cut lending rates and the Bank of England to boost money in circulation at meetings later this week. There are also hopes that Japan and China will announce new stimulus measures.
Rising expectations for central bank help come at a time of heightened concerns that the U.S. economy could be stalling after the Institute for Supply Management said Monday that U.S. manufacturing shrank in June for the first time in almost three years.
“The previously pace-setting factory sector has obviously stumbled, bumped by global economic headwinds (the euro crisis being the epicentre) and more cautious domestic spending,” said BMO Capital Markets senior economist Michael Gregory.
The Toronto stock market finished last week with a strong advance after Europe’s leaders appeared to have finally come up with plans that show they are serious about restoring confidence in the euro zone.
Among other things, the plan allows European bailout funds to pump money directly into troubled European banks, rather than make loans to governments to bail out the banks. The move rescues the banks without putting strapped countries deeper in debt.
Traders also closely watched the impact of tighter sanctions starting July 1 by the U.S. and Europe against Iran over the country’s nuclear program. Iran, OPEC’s second-biggest producer, is finding fewer countries willing to buy its crude, which could pinch global supplies.
The August crude contract on the New York Mercantile Exchange surged $4.11 to $87.86 (U.S.) a barrel, pushing the energy sector up 2.27 per cent. Suncor Energy was up 75 cents at $30.19 (Canadian).
The base metals sector ran up 3.2 per cent as copper futures jumped seven cents to $3.54 (U.S.) a pound. Teck Resources rose $1 to $32.53 (Canadian).
Railway stocks advanced alongside mining stocks with Canadian National Railways up 83 cents to $86.93.
The gold sector racked up a two per cent gain as bullion gained $19.50 to $1,617.20 (U.S.) an ounce. Barrick Gold Corp.climbed 90 cents to $39.25 (Canadian).
Blue chips also supported the TSX with the financial sector ahead one per cent. Royal Bank climbed 64 cents to $52.80.
In Asia, Japan’s Nikkei 225 index rose 0.7 per cent and South Korea’s Kospi gained 0.9 per cent. Australia’s S&P/ASX 200 fell 0.1 per cent while China’s Shanghai Composite advanced 0.1 per cent.
Hong Kong’s Hang Seng jumped 1.5 per cent.
European bourses were positive with London’s FTSE 100 index ahead 0.34 per cent, Frankfurt’s DAX advancing 0.76 per cent and the Paris CAC 40 up 0.1 per cent.
In corporate news, Research In Motion chief executive Thorsten Heins says “there’s nothing wrong with the company as it exists right now” and that he is confident it will get past the current challenges that have resulted in layoffs of about 5,000 people and faltering sales of its BlackBerry smartphones.
Heins made the comment in a CBC Radio interview, part of the company’s efforts to convince customers and investors that it can survive the $518-million (U.S.) loss announced last week.
Meanwhile, Barclays Capital has cut its rating on RIM stock to underweight from equalweight and RIM shares fell seven cents to $7.47.
Elsewhere, the chief executive of U.K. bank Barclays, Bob Diamond, quit his job Tuesday, the latest scalp in a financial markets scandal that has also seen the bank’s chairman announce his intention to resign.
Barclays’ management has come under fire since the bank was fined $453-million last week by U.S. and British regulators for submitting false reports on interbank borrowing rates between 2005 and 2009. Much of that activity originated from traders in Barclays Capital, the investment banking division which Diamond headed at the time.