TORONTO: Canada's main stock index jumped almost 1 percent on Wednesday, hitting a one-month high, after strong economic data in China and Germany buoyed hopes for a global economic recovery and boosted the shares of gold producers.
Gold shares jumped nearly 6 percent on the back of higher bullion prices, driven by a weaker dollar and robust physical demand. Miner Barrick Gold Corp rose more than 8 percent and rival Goldcorp Inc added more than 6 percent.
China's exports and imports grew more than expected in April, offering the possibility of a better outlook for the world's second-largest economy, while German industrial output unexpectedly jumped in March.
The resource-sensitive Toronto index's sharp reactions to developments in China, a big consumer of commodities from Canada, stem from its large exposure to materials and energy stocks.
The market's gains extended into a fifth straight session. The TSX has risen 1.2 percent on the year, recovering from a massive commodity-led selloff last month while still trailing growth at major indices like the S&P 500.
"Equities are benefiting from a 'Goldilocks environment'," said Stan Wong, vice president and portfolio manager at Macquarie Private Wealth.
"The economies are not too hot to stop the monetary easing policies of the central banks and not too cold to cause corporate earnings to slip into negative territory."
Earlier this week, major central banks indicated their support of growth-oriented policies.
"Global central banks stimulus continues to be the major driver for all asset markets," said Fergal Smith, managing market strategist at Action Economics.
The Toronto Stock Exchange's S&P/TSX composite index closed up 120.94 points, or 0.97 percent, at 12,585.05, close to its highest point since April 3.
Six of the 10 main sectors on the index were higher.
The materials sector, which includes mining stocks, rose 4.5 percent, helped by higher gold shares.
"We're seeing a reflex bounce from the capitulation several weeks ago," Wong said, referring to strength in gold shares and the price of the commodity. "We'll probably not see much more than that."
Smith said "the technical backdrop for gold itself has deteriorated and that will take some time to work its way up."
Energy shares rose 0.6 percent and financials, the index's most heavily weighted sector, gained 0.4 percent.
In company news, Tim Hortons Inc named a new chief executive and reported a 3 percent fall in first-quarter profit. The stock lost 2.6 percent to C$57.13.
Quebecor Inc fell nearly 3.4 percent after the media and telecommunications company's first-quarter profit halved due to higher costs, a sharp drop in media revenue and lower gains on financial instruments.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>*
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