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File photo of a man watching the Toronto stock market activity on a screen posted at 121 King Street in Toronto's financial district. (Michelle/The Globe and Mail)
File photo of a man watching the Toronto stock market activity on a screen posted at 121 King Street in Toronto's financial district. (Michelle/The Globe and Mail)

TSX surges as bargain hunters move in Add to ...

The Toronto stock market surged more than 200 points Tuesday as traders caught up to solid advances in commodities and global markets while the TSX was closed for Victoria Day.

Investors also appeared ready to shop for stocks beaten down over three weeks of sharp declines that took the TSX down to the levels of last October, largely because of worries about the future of the eurozone.

The S&P/TSX composite index ran ahead 231.5 points to 11,512.14 while the TSX Venture Exchange was up 31.43 points at 1,259.31.

“I think the reason we’re getting into a day like today, and why we can get more days like today going forward, is that generally the undertone of the North American economy is much more positive than what you would get if you just read the headlines of what’s going on in Europe,” said Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis, Mo.

“And that suggests there are still opportunities for investors to be putting money to work in today’s market. But there’s no question that in the interim, the lack of developments out of Europe are really going to have some sort of a grip on the markets day to day.”

Canadian dollar rose 0.38 of a cent to 98.34 (U.S.).

New York markets were higher as the U.S. National Association of Realtors says home sales rose 3.4 per cent last month to a seasonally adjusted annual rate of 4.62 million, which met economists’ expectations.

The Dow Jones industrial average up 58.16 points at 12,562.64 after running up 135 points on Monday. The Nasdaq composite index was ahead 14.46 points to 2,861.67 and the S&P 500 index gained 10.63 points to 1,326.62.

Commodity prices were mixed as oil and copper advanced Monday after closing at multi-month lows last week on demand worries and a strengthening U.S. dollar. Traders have avoided riskier investments such as commodities, equities and resource-based currencies such as the Canadian dollar and bought into the safe haven of U.S. Treasuries.

A stronger greenback usually helps depress oil prices, which are denominated in U.S. dollars, as it makes oil more expensive for holders of other currencies.

The June crude contract on the New York Mercantile Exchange was off 28 cents at $92.29 a barrel after gaining $1.09 Monday. The energy sector gained 3 per cent while Canadian Natural Resources was up 95 cents (Canadian) to $30.90.

The base metals sector ran ahead 4.6 per cent while copper was unchanged at $3.51 (U.S.) a pound following a 3-cent rise Monday. Ivanhoe Mines gained 61 cents to $9.37.

June gold was off 70 cents to $1,588 (U.S.) an ounce after dipping $3.20. The gold sector was up almost 4 per cent and Barrick Gold Corp. advanced $1.07 (Canadian) to $38.94.

The financial sector gained 1.3 per cent ahead of earnings reports from the big banks which are expected to show some softening from the last quarter.

“Our view of the financial sector has been more neutral of late,” added Mr. Fehr.

“We think that the banks themselves are fantastic operators. But our view is that the real bastion of profitability for them, which is domestic residential lending and personal loan growth, is an area that is poised to slow.”

Bank of Montreal climbed 88 cents to $55.91. BMO hands in earnings Wednesday while TD Bank and Royal Bank report the following day. Scotiabank will deliver its earnings report May 29, with National Bank and CIBC following up May 30.

Meanwhile, traders also digested a dire warning from the Organization for Economic Co-operation and Development that the 17-country euro zone risks falling into a “severe recession.”

And the OECD, which comprises the world’s most developed economies, called on governments and Europe’s central bank to act quickly to stop the slowdown spilling over into the global economy.

OECD chief economist Pier Carlo Padoan called on euro zone leaders to adopt a “policy compact” to promote growth even while reducing deficits.

Global markets have declined sharply this month, particularly since an inconclusive election in Greece on May 6 ratcheted up worries that the country could be forced to exit the euro zone. Greeks are going back to the polls June 17 and there are concerns that parties supporting an end to the austerity measures that have made massive bailouts possible could attract strong support.

European bourses were higher despite the gloomy OECD report as London’s FTSE 100 index gained 1.66 per cent, Frankfurt’s DAX climbed 1.47 per cent and the Paris CAC 40 rose 2.06 per cent.

In corporate news, Canada’s largest operator of convenience stores, Alimentation Couche-Tard Inc. , says minority shareholders of Scandinavian convenience store operator Statoil Fuel & Retail have been slow to tender their stock to its friendly takeover offer. The $2.68-billion (U.S.) offer has the support of Statoil ASA, the oil company that owns 54 per cent of the Scandinavian convenience store operator. But Couche-Tard requires acceptance by 90 per cent of Statoil Fuel’s shareholders. Couche-Tard shares dropped $1.19 to $40.22.

Social media site Facebook continued to see its share price retreat after making its debut Friday at $38. It was down 74 cents or 2.17 per cent from Monday to $33.29. It closed Friday at $38.23.

Best Buy Co. said Tuesday that its fiscal first-quarter profit dropped 26 per cent to $158-million, or 46 cents per share. Excluding restructuring charges, earnings were 72 cents per share against the 59 cents that analysts expected. Revenue rose two per cent to $11.61-billion, aided by an extra week, and its shares edged 32 cents higher to $18.10.

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