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Canada’s main stock index rose on Wednesday in a broad-based rally led by shares of energy companies.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially finished up 119.05 points, or 0.79 per cent, at 15,182.64.

Ten of the index’s 11 major sectors finished higher, led by the energy sector, which climbed 2.6 per cent despite a decline in oil prices.

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Canadian energy companies cheered Alberta’s decision to mandate output cuts to reduce a supply glut. Canadian Natural Resources Ltd. was up 4.2 per cent, while Suncor Energy Inc. jumped 3.3 per cent.

The materials sector, which includes precious and base metals miners, added 1.5 per cent despite gold prices edging lower, a day after hitting their highest level in more than five weeks. Nutrien Ltd. rose 3.2 per cent, while Teck Resources Ltd. sat up 3.8 per cent.

Marijuana producers pushed health care stocks lower by 6.1 per cent. Aphria Inc. lost 16.5 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. were down 12.8 per cent and 10.1 per cent, respectively.

The Canadian dollar weakened to a 1-1/2 year low against the greenback on Wednesday as investors slashed expectations for further interest rate hikes from the Bank of Canada after a dovish announcement from the central bank.

The Bank of Canada kept its benchmark interest rate on hold at 1.75 per cent, as expected, and said there might be more room for non-inflationary growth, suggesting the pace of future hikes could be more gradual.

“From where we were last time out, things are a little bit more dovish in tone, and, not surprisingly we’ve seen the Canadian dollar weaken in the wake of that,” said Michael Gregory, a senior economist at BMO Capital Markets.

Chances of a hike in January slumped from about 60 per cent before the data to 35 per cent, the overnight index swaps market indicated.

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The Canadian dollar was trading 0.8 per cent lower at 1.3377 to the greenback, or 74.76 U.S. cents. The currency touched its weakest since June 2017 at 1.3400.

The loonie weakened as global stocks were pressured by renewed worries about trade tensions and as the U.S. dollar

strengthened against a basket of major currencies.

U.S. markets were closed to mark former President George H.W. Bush’s death, but the effect of Wall Street’s turmoil in the previous session, when New York-listed shares tumbled more than 3 per cent, was felt in Asia and Europe.

The MSCI’s all-country index shed 0.5 per cent.

Tuesday’s markets chaos came a day after equities boomed on optimism that China and the U.S. had temporarily called a tariff ceasefire to sort out their trade dispute. But doubts began soon after along with President Donald Trump threatening “major tariffs” on Chinese imports if his administration failed to reach an effective trade deal with Beijing.

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“As I look into next year, most expectations for further gains have been pared back. Investors have gone from extended bullishness at the start of the year on equities to an uncomfortable neutrality,” said Paul O’Connor, head of multi-asset at Janus Henderson.

Trump’s comments, alongside the drop in U.S. stocks and bond yields, pushed Asian shares outside Japan 1.4 per cent lower. The pan-European STOXX 600 index lost 1.16 per cent.

Markets across the world have been rattled by recession fears, exemplified by the flattening U.S. Treasury yield curve.

The benchmark Treasury 10-year yield fell to its lowest point since mid-September on Tuesday, while the spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008. That signalled to some investors an approaching U.S. economic slowdown.

The flattening of the curve gained momentum after last week’s signal by the Federal Reserve that it may be nearing an end to its three-year rate-increase cycle.

The greenback rose 0.32 pe rcent against the Japanese yen and the euro gave up all its early gains to trade down 0.04 percent against the dollar.ns between Washington and Beijing sapped demand for the safe-haven greenback.

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The greenback rose 0.32 percent against the Japanese yen and the euro gave up all its early gains to trade down 0.04 per cent against the dollar.

Gold, which moves inversely with the dollar, slipped on expectations of more rate hikes following remarks from a U.S. Federal Reserve official and as some investors booked profits after prices climbed to their highest in more than five weeks.

Palladium, on the other hand, surpassed the bullion for the first time in about 16 years, to hit a record high of $1,263.56 per ounce as higher speculative interest and larger supply deficit boosted the auto-catalyst metal.

Markets are also bracing for more news on Brexit. British Prime Minister Theresa May suffered embarrassing defeats on Tuesday, the start of five days of parliamentary debate over her plans to leave the European Union.

The pound rose off 17-month lows of $1.2659 hit on Tuesday to around $1.2751, up 0.3 per cent on the day, amid creeping optimism that Britain could opt to stay in the EU after all.

Oil prices dipped on Wednesday ahead of a meeting of the world’s biggest exporters, who will discuss cutting output to help shore up prices and curb excess supply.

The Organization of the Petroleum Exporting Countries, Russia and other producers will meet in Vienna this week to discuss a potential cut in production.

A monitoring committee of OPEC and its allies, including Russia, agreed on the need to cut oil output in 2019, two sources familiar with the discussions said, adding that volumes and the baseline for cuts were being debated.

Brent crude futures fell 52 cents to settle at $61.56 a barrel after earlier reaching a session high of $63.29 a barrel and a low of $60.80.

U.S. West Texas Intermediate (WTI) crude futures fell 36 cents to settle at $52.89 a barrel. The contract traded between $54.44 a barrel and $52.16 a barrel during the session.

Russian Energy Minister Alexander Novak told reporters he had a “good” meeting with his Saudi counterpart, Khalid al-Falih, on Wednesday and they planned more talks.

“All of us, including Russia, agreed there is a need for a reduction,” Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy told reporters after a ministerial committee that groups Saudi Arabia, Russia and several other producers met on Wednesday.

Reuters

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