Canadian stocks rose on Friday, boosted by energy and financial shares, as investor fears of further market turmoil following Sunday's Greek election eased on talk the world's major central banks were poised to step in to reduce any potential fallout.
Officials from the G20 nations, whose leaders are meeting in Mexico next week, said that central banks were ready to take steps to stabilise financial markets - if needed - by providing liquidity and prevent any credit squeeze after Sunday's election. "Stock markets are higher today because the thought is that the worst-case outcome over the weekend is being taken off the table," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri. "It's a signal that maybe there can be a co-ordinated effort that can prevent the Greek crisis from spreading around Europe, which is the largest market concern right now."
Nearly all of Canada's 10 main sectors were higher. Gains were led by the heavyweight oil and gas group, which rose 1.8 percent as oil prices rebounded. Leading the way among energy names was Encana Corp, which jumped 5.7 percent to C$22.60. Suncor Energy climbed 1.7 percent to C$29.01 and Cenovus Energy rose 2.4 percent to C$32.29.
Central banks from Tokyo to London prepared for any turmoil following Greece's election, with the European Central Bank hinting at an interest rate cut and Britain set to open its coffers. That helped Canadian financials, which edged up 0.5 percent. Royal Bank of Canada, the country's largest lender, climbed 0.8 percent to C$51.24 and Bank of Montreal rose 0.9 percent to C$55.22. Top insurer Manulife Financial Corp gained 1.6 percent to C$10.74.
The Toronto Stock Exchange's S&P/TSX composite index closed up 58.48 points, or 0.5 percent, at 11,524.9. It was also up 0.2 percent for the week, its second straight weekly increase. Some investors are worried that if Greece moves out of the euro zone, it could trigger a global financial meltdown similar to the one that followed the collapse of Lehman Brothers in 2008.
"Markets have acted as if we were already in a post-Lehman environment," said Michael Gayed, chief investment strategist at Pension Partners LLC in New York. "You had defensive sectors outperforming in ways not seen since after Lehman and yet there's been no event." On Friday, most of the TSX's defensive sectors - healthcare, telecoms, consumer staples and consumer discretionary - finished in the red. Losses were led by Telus Corp, down 1.4 percent at 58.44, Canadian Tire Corp, off 1.1 percent at C$66.09, and Shoppers Drug Mart, which sank 0.7 percent to C$39.51.
Valeant Pharmaceuticals International Inc slid 2.4 percent to C$45.92 after the Canadian drugmaker said on Friday it will buy privately held drugmaker OraPharma for about $312 million. Central bank hopes offset the latest round of weak US economic data, which pointed to sluggish growth domestically. A gauge of manufacturing in New York state fell sharply in June, though it still showed growth, while a read on consumer sentiment was also below consensus forecasts.
The weak data raised the possibility that the US Federal Reserve might be more open to monetary easing when its policy-making committee meets on Tuesday. In Canada, sales of existing homes climbed 9 percent in May from a year earlier, but prices fell 0.3 percent, the Canadian Real Estate Association said on Friday. In other company news, shares of Bombardier Inc rose 2.6 percent at C$3.91 a day after the train and plane maker signed a contract with the San Francisco Bay Area Rapid Transit District (BART) to deliver 260 new rail cars for $631 million.
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