TSX climbs on ECB plan hopes for more stimulus

Mining stocks led the way to a strong showing on the Toronto stock market Friday amid general relief over a plan to lower eurozone borrowing costs.The S&P/TSX composite index moved up 98.93 points to 12,238.67, while the TSX Venture Exchange climbed 12.42 points to 1,270.71.The plan to buy up government bonds raised hopes that greater financial stability in Europe will help the region get out of its economic slump, hopefully hike demand for oil and metals and send shares prices higher on the resource-intensive TSX.“Any indication of stability is positive, is viewed that we can get things back on track and get global economic growth back into a positive trajectory,” said Jennifer Dowty, portfolio manager at Manulife Asset Management.It was a different showing in New York as traders considered amid vastly different employment pictures for Canada and the United States.Surging copper and a weak U.S. currency also helped push the Canadian dollar up 0.52 of a cent to 102.27 cents US as Statistics Canada said the economy created 34,300 jobs in August. That was much better than the approximately 10,000 new jobs that economists had expected. The unemployment rate remained unchanged at 7.3 per cent, however.U.S. markets were weak as a poor U.S. jobs report was expected to persuade the Federal Reserve to launch further stimulus.The U.S. Labour Department reported that only 96,000 jobs were created in August, less than the 125,000 that had been forecast. The jobless rate edged down to 8.1 per cent from 8.3 per cent but that was because of fewer people looking for work. And to top it all off, the department said 41,000 fewer jobs had been created in June and July than previously reported.The Dow Jones industrials was down 8.07 points to 13,283.93, while the Nasdaq composite index was off 0.31 of a point to 3,135.5, weighed down by a revenue warning from chip giant Intel.Previous easing measures by the Fed have supported financial markets. The Fed’s intentions could become clearer next week when the central bank holds its next interest rate meeting.“It tilts the scale for some sort of action next week by (Fed chairman Ben) Bernanke,” Dowty said. “The market is certainly betting on it, suggesting if we don’t see action next week it will certainly create some volatility.”North American markets were set to end the week higher in the wake of the ECB’s move Thursday to get a grip on the eurozone’s debt crisis.The plan amounts to a commitment to buy unlimited amounts of short-term bonds from euro countries that request help. Ostensibly, the plan is meant to ease the financial pressures on Spain and Italy by giving them time to reduce debt and reform their economies.The ECB had been under pressure to take action after Spain and Italy became the latest countries forced to pay yields in the seven per cent range on their benchmark 10-year bonds earlier this year, a level that raised worries that they could be forced to seek bailouts.The ECB plan seemed to be working as Spain has seen its cost of borrowing fall since the announcement. The yield on Spain’s 10-year bond fell another 0.21 percentage point to 5.80 per cent on Friday, the first time it’s gone below six per cent since May.Investors think Spain will make a formal request to tap the new program within weeks, which could ease the pressures in the eurozone’s fourth-largest economy.TSX gains were led by a 5.7 per cent rise in the base metals sector as September copper ran ahead 12 cents to US$3.64 a pound. Teck Resources (TSX:TCK.B) gained $1.63 to C$28.66 while First Quantum Minerals (TSX:FM) jumped $1.54 to $21.51.The gold sector rose over two per cent as bullion prices turned positive on the prospect the U.S. Federal Reserve will decide on another round of quantitative easing, which would see the central bank print more money to buy bonds. December gold was up $33.10 to US$1,738.70 an ounce and Barrick Gold Corp. (TSX:ABX) rose $1.04 to C$39.32 while Goldcorp Inc. (TSX:G) improved by 87 cents to $42.23.The energy sector rose just over one per cent as the October crude contract on the New York Mercantile Exchange gave up early gains and slipped 23 cents to US$95.30 a barrel. Suncor Energy (TSX:SU) climbed 41 cents to C$32.26 while Cenovus Energy (TSX:CVE) rose 57 cents to $33.87.European bourses advanced with London’s FTSE 100 index ahead 0.31 per cent while Frankfurt’s DAX gained 0.76 per cent and the Paris CAC 40 climbed 0.37 per cent.In corporate news, Lululemon Athletica Inc. (TSX:LLL) reported quarterly net earnings were $57.2 million or 39 cents per share. That compared with net earnings of $38.4 million or 26 cents per share in the second quarter of fiscal 2011. The Vancouver-based activewear retailer also reported revenue up 33 per cent to $282.6 million. It also raised its full year revenue projection and its stock rose $5.60 or 8.3 per cent to $72.99.Intel is cutting its third-quarter revenue forecast due to softer than expected demand for its chips amid difficult economic conditions. Intel chips go into about 80 per cent of personal computers and into a vast number of servers as well, making it a bellwether for spending on computers. Its stock fell 81 cents to US$24.28.Commodities trader Glencore International PLC is raising its $34-billion bid for Anglo-Swiss miner Xstrata by some nine per cent. Xstrata announced Friday that it had received a proposal from Glencore to offer 3.05 new shares for each Xstrata share, up from the existing offer of 2.8 shares. That original offer had been resisted by Qatar Holding, a major Xstrata shareholder. read more