The Toronto Stock Exchange's main index rose almost 80 points on Friday as a rebound in commodity prices helped energy and mining shares push the benchmark to finish a flat week on a positive note.
The S&P/TSX composite index rose 78.31 points, or 0.6 percent, to close at 12,718.99. The energy group jumped 1.4 percent, while the resources-laden materials sector, which includes Canada's largest miners, rose 1.1 percent. The composite gained less than 0.5 percent on the week, after closing at 12,678.81 a week ago.
On Friday, the S&P/TSX 60 index of large-cap names rose 6.44 points, or 0.9 percent, to 730.89. Volume was 353 million shares worth C$6.1 billion, with 825 advancers and 710 decliners.
The gains were a direct reversal of Thursday's nearly 90-point drop on lower gold and oil prices. The two sessions also served as an example of the volatility that has marked trading on the commodities-heavy TSX thus far in 2007.
Crude bounced higher on Friday, holding above the psychologically important $50 a barrel level as temperatures fell in the United States, boosting fuel demand. February crude settled up $1.51, or 3 percent, at $51.99. A day earlier, it slumped below $50 for the first time since May 2005.
Canadian energy names followed the commodity's bounceback, with Suncor Energy Inc gaining C$2.00, or 2.4 percent, to C$86.51, and Nexen Inc adding C$2.92, or 4.6 percent, to C$66.79. "At this point, investors seem to be giving crude oil the benefit of the doubt," said Elvis Picardo, chief market strategist at Global Securities Corp in Vancouver. He said that much of the "disproportionate" fear premium built into the oil price has been dissipating, driving crude prices lower.
US oil prices have fallen about 15 percent since the end of 2006, but Picardo added it wouldn't take much to trigger a geopolitically driven rally. "I think, given that we've had such a rapid decline in the price of crude, all it needs is one event which would come out of left field for crude to go back up to $60," he said, adding that weather continues to play with oil prices.
Volatility is expected by many to remain a feature of the TSX, given its heavy exposure to commodities. "Commodities - not necessarily because of fundamentals, but sometimes because of hot money - are extremely volatile," said John Kinsey, portfolio manager at Caldwell Securities Ltd.
"But I think that the cycle for the commodities isn't over, that if you can stand the day-to-day fluctuations, longer-term commodity stocks are going to do well." Gold also recovered on Friday, with US bullion for February delivery settling up $8.30 at $636.40 an ounce as rebounding oil prices prompted investor interest.
The rally, following a gold-price drop on Thursday, also spurred Canadian gold miners. Meridian Gold added C$1.06, or 3.5 percent, to C$31.67, and Barrick Gold rose 22 Canadian cents to C$33.51. In the United States, the Dow Jones industrial average edged 2.4 points lower to 12,565.53. The tech-heavy Nasdaq rose 8.1 points, or 0.3 percent, to 2,451.31.
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