The Toronto stock market jumped about 200 points Monday, led by resource stocks that surged after European leaders pledged to unveil concrete steps to deal with the region’s debt crisis by mid-week.
A jump of more than seven per cent in the mining group helped send the S&P/TSX composite index up 212.79 points to 12,162.28, as commodity prices were also supported by strong Chinese economic data.
European leaders met over the weekend to hammer out details of a broad plan for the debt crisis. The plan, expected Wednesday, is likely to include measures to recapitalize the region’s banks, who are likely to accept steep losses on Greek debt, as well as boost the eurozone bailout fund.
“We don’t really know, we just anticipate something good, which is not a bad assumption either,” said Sid Mokhtari, market technician at CIBC World Markets.
“We don’t know how they will address it, but at least we know they are trying to give a message to the market that they do have a grand plan for this whole debt crisis in Europe.”
German lawmakers who have been briefed by Chancellor Angela Merkel say the eurozone bailout fund will see its firepower increased to more than C1 trillion to enable it to contain the government debt crisis in the region. That is more than twice the existing size of the European Financial Stability Fund.
The TSX Venture Exchange rose 27.42 points to 1,560.33.
The Canadian dollar advanced a day before the Bank of Canada’s scheduled announcement on interest rates. The central bank is widely expected to leave its key rate unchanged at one per cent and the loonie was up 0.55 of a cent at 99.69 cents US.
Positive earnings from heavy equipment maker Caterpillar helped push U.S. markets sharply higher as the Dow Jones industrial index gained 104.83 points to 11,913.62.
Caterpillar reported that third-quarter net income rose to US$1.14 billion, or $1.71 a share, which beat estimates of $1.57 a share. Its shares were up five per cent to US$91.77 in New York. Shares in Vancouver-based Finning International (TSX:FTT), the world’s biggest Caterpillar dealer, ran ahead $1.41 to C$23.12 on the TSX.
The Nasdaq rose 61.98 points to 2,699.44 while the S&P 500 index was up 15.94 points to 1,254.19.
Oil and metal prices advanced, supported by data showing an expanding Chinese economy.
HSBC’s preliminary — or “flash” — China Manufacturing Purchasing Managers’ Index climbed to 51.1 on a 100-point scale, up from 49.9 in September.
Among key sub-components of the survey, manufacturing output rose to a six-month high of 51.7, picking up from 50.3 in September, and above the 50 level which indicates expansion.
“The data provide reassurance that China will avoid the hard landing over which some market participants have expressed concern,” said Scotia Capital currency strategist Eric Theoret.
The TSX energy sector gained 2.88% as the December crude contract on the New York Mercantile Exchange gained $3.87 to US$91.27 a barrel. Suncor Energy (TSX:SU) moved up $1.31 to $31.58 and Canadian Natural Resources (TSX:CNQ) climbed 86 cents to $34.52.
Copper prices also took off after slumping over five% last week, with the December copper contract in New York ahead 23 cents to US$3.45 a pound. China is the biggest consumer of the metal, which is often used as a barometer for economic well being as it is used in so many applications, from wiring to infrastructure. The base metals sector climbed 7.35% as Teck Resources (TSX:TCK.B) rose $2 to $36.80 and First Quantum Minerals (TSX:FM) gained $1.84 to $17.83 .
Canadian Pacific Railway (TSX:CNR) rose alongside mining stocks, ahead $1.05 to $59.83. Elsewhere in the industrials sector, Bombardier Inc. (TSX:BBD.B) gained seven cents to $4.06.
Bullion prices advanced with the December contract up $16.20 to US$1,652.30 an ounce, pushing the gold sector up. Barrick Gold Corp. (TSX:ABX) ran up $1.53 to $46.45 and Goldcorp Inc. (TSX:G) improved by $1.44 to $46.44.
The information technology sector was also supportive, up 2.83% with Research In Motion Ltd. (TSX:RIM) ahead 57 cents to $23.57 while Celestica (TSX:CLS) stepped up seven cents to $8.07.
In other corporate news, shares of Silvercorp Metals Inc. (TSX:SVM) shot up $1.42 or 17.36% to $9.60 after the company said an investigation had found its accounting and financial reporting accurate, despite allegations by short sellers to the contrary.
ATS Automation Tooling Systems Inc. (TSX:ATA) shares fell 15 cents to $6.48 after the company said discussions to spin off its solar-energy subsidiaries have ended without an agreement. It plans to explore further possibilities for a sale of some or all of those assets.
Managed-care company Cigna Corp. said it will buy fellow health insurer HealthSpring Inc. in a US$3.8-billion deal that would boost Cigna’s Medicare Advantage business. Cigna shares were ahead 64 cents to US$45.34.