TORONTO — The Toronto stock market was up sharply in early trading Tuesday as investors hoped that a meeting of European Union leaders later this week will address the growing problem of huge debt levels racked up by several European governments.
The S&P/TSX composite index rose 118.1 points to 11,233.4 after dropping 108 points Monday as investors worried the sovereign debt issue could derail a global economic recovery.
The Canadian dollar was up 0.49 of a cent to 93.56 cents US.
Stock markets have lost ground recently over fear spreading about unsustainable debt loads taken on by some European countries, particularly Spain, Portugal and Greece. Markets doubt that governments have the political will necessary to impose austerity measures to get large deficits under control.
And although the European Investment Bank said Tuesday it would not be able, according to its own rules, to offer Greece or any other country a bailout, investors are betting that a meeting on Thursday of EU heads of state will address the market's worry about sovereign debt.
"This meeting of EU leaders is set to discuss the economic road map of the eurozone for the next 10 years; however, it is difficult to see how the problems of Greece and other vulnerable indebted nations won't overshadow the summit," said Michael Hewson, an analyst at CMC Markets.
He said a bailout would be very problematic, since that would urge other heavily-indebted countries to seek the same treatment.
Hopes for a bailout or some form of aid also grew on news that European Central Bank President Jean-Claude Trichet was returning home from a summit in Sydney a day earlier than planned.
Meanwhile, the base metals sector led TSX gainers, up almost three per cent as March copper added three cents to US$2.95 a pound and investors also took in major earnings reports from the commodity sector.
Teck Resources Ltd. (TSX:TCK.B) said Monday it earned $411 million in its latest quarter as revenue increased 35 per cent compared with a year ago, helped by sharply higher copper and zinc revenue but offset by lower coal prices. The mining company said its profit amounted to 70 cents per diluted share compared with a loss of $607 million or $1.27 per diluted share a year ago. Teck shares gained $1.40 to $35.90.
Fertilizer producer Agrium Inc. (TSX:AGU) reported fourth-quarter profit came in at US$30 million, down sharply from $124 million a year earlier when it and other fertilizer producers were still reaping the rewards of strong demand and high prices. Agrium's net sales fell to $1.44 billion in the fourth quarter of 2009, down from US$1.94 billion in the comparable period of 2008 and its shares gained $1.31 to $63.33. Shares in rival Potash Corp. (TSX:POT) advanced $1.90 to $111.24.
And Western Coal Corp. (TSX:WTN) shares ran ahead 12 cents to $3.27 after it said its quarterly profit fell to $24 million or nine cents per diluted share. That was down from a profit of $62.5 million or 29 cents per share in the year-earlier period. Revenue fell to $118.7 million from $176.6 million in the final three months of 2008.
The TSX energy sector advanced 0.9 per cent as a weakening U.S. dollar offset concerns about the strength of the global economic recovery. The March crude contract on the New York Mercantile Exchange was up 68 cents to US$72.57 a barrel. Suncor Energy (TSX:SU) gained 50 cents to $31.78.
Husky Energy Inc. (TSX:HSE) shares gained 34 cents to $26.98 after the company announced its third significant discovery in the South China Sea. The Calgary-based company said Monday that an exploration well in the waters south of Hong Kong tested natural gas at an equipment restricted rate of 57 million cubic feet per day, with indications the Liuhua 29-1 well could produce more than 90 million cubic feet of gas per day in the future.
The April gold bullion contract on the Nymex climbed $7.10 to US$1,073.30 an ounce, pushing the gold index up 3.3 per cent. Goldcorp Inc. (TSX:G) advanced 86 cents to $37.74.
All TSX sectors advanced with the financial group up 0.6 per cent. Manulife Financial (TSX:MFC) was ahead 20 cents to $19.17.
The TSX Venture Exchange gained 4.19 points to 1,464.79.
New York markets also gained ground with the Dow Jones industrials up 109.8 points to 10,018.2, after losing 104 points to close below 10,000 for the first time since November.
The Nasdaq composite index gained 22.76 points to 2,148.81 while the S&P 500 gained 3.35 points to 1,069.55.
In other earnings news, Molson Coors (NYSE:TAP) says its fourth-quarter profit more than doubled to US$218.2 million because of favourable tax benefits. Worldwide beer volume sold fell four per cent as people cut back on their purchases but higher prices helped drive an 11 per cent rise in revenue to US$820.8 million. Its shares in New York inched up three cents to US$41.34 while Molson Coors Canada shares (TSX:TPX.B) were off $1.15 to $43.70.
Oilsands company Opti Canada Inc. (TSX:OPC) had a loss of $212 million or 75 cents per share in its fourth quarter of 2009. That's a reduction from the year-earlier loss of $410 million or $2.09 per share. The Calgary-based oilsands company's revenue also fell, to $43 million in the final quarter of 2009 from $69 million a year earlier. Opti Canada shares slipped four cents to $1.87.
Overseas, Tokyo's Nikkei 225 stock average lost 0.2 per cent.
Chinese markets fared better, but trading has been listless as investors hunkered down ahead of a week-long closure of mainland exchanges for next week's Lunar New Year holiday. The benchmark Shanghai Composite Index gained 0.5 per cent and Hong Kong's Hang Seng index advanced 1.2 per cent.
London's FTSE 100 index was ahead 0.49 per cent, Frankfurt's DAX gained 0.3 per cent while the Paris CAC 40 advanced 0.1 per cent.
Copyright © 2010 The Canadian Press. All rights reserved.
