TSX closes higher on hopes summit will yield fix for government debt crisis

The Canadian dollar ran up 1.12 cents to 99.52 cents US. The loonie had earlier weakened after the Bank of Canada, in its new Monetary Policy Review, cut fourth-quarter Canadian gross domestic product growth to 0.8% from an earlier estimate of 2.9%.

A strong earnings report from airplane maker Boeing and a healthy durable goods orders report also helped push New York markets sharply higher.

The Dow Jones industrial index ran ahead 162.42 points to 11,869.04. The Nasdaq composite index was 12.25 points higher to 2,650.67 and the S&P 500 index rose 12.95 points to 1,242.

European officials met Wednesday to patch together a plan that would prevent banks from taking huge losses if the Greek government defaults on its bonds.

Stocks ran ahead late in the session after Agence France-Presse reported that China has agreed to invest in Europe’s financial rescue fund by buying bonds.

Buying sentiment also improved after the German parliament gave wide backing to plans to increase the firepower of the eurozone’s rescue fund. Lawmakers voted in favour of leveraging the C440-billion bailout fund to make it more effective. That sends Chancellor Angela Merkel to a European Union summit in Brussels Wednesday with a strong mandate to seal a deal.

Opposition leaders briefed by Merkel have said the changes would take the fund’s lending capacity above C1 trillion, though that isn’t finalized.

However, some analysts said that even if it is approved, it’s not nearly enough.

“It is unlikely anything is going to come out of this meeting but if it does, it’s still not going to be big enough,” said Gavin Graham, president of Graham Investment Strategy.

“If it’s C1 trillion, it’s not big enough to actually solve the problem.”

Graham thinks leaders would have to come up with a much bigger lending capacity, something in the neighbourhood of C2 trillion.

Merkel has also indicated that private investors should take a writedown of at least 50% on Greek debt holdings.

Mining stocks led advancers with the base metals sector up 4.4% as the December copper contract on the Nymex gained seven cents to US$3.49 a pound. Teck Resources (TSX:TCK.B) was up $1.51 to $37.33 and First Quantum Minerals (TSX:FM) advanced $1.37 to $18.60.

Shares in miner Sherritt International Corp. (TSX:S) gained 62 cents to $5.50 as it said its third-quarter net profits more than doubled to $45.5 million or 16 cents a share. Revenues in the quarter rose to $466.4 million from $412.7 million.

Oil lost early gains after hopes for a resolution to the debt crisis had sent oil prices sharply higher the previous three sessions. The December crude contract on the New York Mercantile Exchange declined $2.97 to US$90.20 a barrel. The energy sector was up almost one per cent and Cenovus Energy (TSX:CVE) gained 79 cents to C$36.21 while Canadian Natural Resources (TSX:CNQ) rose 65 cents to $34.49.

Industrials were also higher, helped along by a solid earnings report from Canadian National Railways (TSX:CNR). The railway beat expectations as its net profit increased by 18.5% to $659 million or $1.46 a share in the third quarter on higher revenues. Its shares were $1.43 higher at $76.56.

Tech stocks led decliners with shares in Research In Motion Ltd. (TSX:RIM) down $1.69 to $20.89 . The BlackBerry maker has delayed the launch of an updated operating system for its PlayBook tablet until February 2012, marking yet one more setback in RIM’s efforts to come out with a viable alternative to Apple’s iPad.

Meanwhile, Montreal-based law firm The Consumer Law Group Inc. said it has filed a nationwide class-action suit against RIM. The suit claims that RIM failed to directly compensate BlackBerry users, who pay monthly data fees to wireless carriers, for a massive service outage earlier this month.

The gold sector was also lower while bullion also moved higher with the December contract in New York ahead $23.10 to US$1,723.50 an ounce. Kinross Gold Corp. (TSX:K) faded nine cents to C$14.55.

Shares in Barrick Gold Corp. (TSX:ABX) gained 14 cents to $48.19 after the world’s largest gold producer said it’s increasing the company’s quarterly dividend by 25% to 15 cents US per share.

The U.S. Commerce Department says overall demand for durable goods fell 0.8% in September. But that was largely because of a 25.5% drop in volatile commercial aircraft orders. Outside of transportation, orders rose 1.7%. And business investment in core capital goods rose 2.4%, the biggest increase in six months.

Elsewhere on the earnings front, Rogers Communications Inc. (TSX:RCI.B) said third-quarter profits rose 29% to $491 million or 87 cents a share as it grew results at its wireless operations amid heightened competition. Analysts polled by Thomson Reuters had on average expected earnings per share of 82 cents and Rogers shares gained 41 cents to $35.93.

Boeing Co. said its third-quarter earnings jumped 31% to US$1.1 billion, or $1.46 a share and its stock was up 4.5% to US$66.56 New York.

Ford Motor Co. shares were down 4.5% to US$11.87 as it earned US$1.6 billion in the third quarter, down two per cent from a year ago. The decline was partly due to a charge for hedging on commodities like copper, which fell in price in the quarter.

Media and entertainment company Corus Entertainment Inc. (TSX:CJR.B) said fourth-quarter net income from continuing operations rose to $29.2 million from $4.2 million a year ago. Revenue increased seven per cent to $200.2 million helped by “exceptional” revenue and profit growth from television division and its shares advanced two cents to $19.59.

In other corporate news, MI Developments Inc. (TSX:MIM), the former real-estate arm of Magna International Inc. (TSX:MG), has decided to convert into a real estate investment trust, increase its quarterly dividend dramatically and increase its debt level. Its shares ran up $1.83 to $31.68.