TORONTO - Stock markets have extended their March rally into a third week, with indexes in Toronto and New York racking up major advances amid a major deal in the Canadian oilpatch and another effort to revive American banks.
Toronto's S&P/TSX composite index jumped 452.16 points Monday to 8,958.51. The Canadian benchmark index is up 18.4 per cent since its March 9 trough, led by a 34 per cent rise in the financial sector.
"I don't think we're through all the bad news," said Kate Warne, Canadian market specialist at Edward Jones in St. Louis.
However, instead of reacting negatively to all news as the market did in January and February, "it's now balanced more positively in responding to good news and negatively to bad news," she added.
Energy stocks took off after Suncor Energy Inc. (TSX:SU) and Petro-Canada (TSX:PCA) announced an all-stock combination into a company valued at $43.3 billion.
The new enterprise is to operate under the Suncor name with existing Petro-Canada shareholders owning 40 per cent. Suncor shares slipped 16 cents to $30.74 while Petro-Canada soared $6.05 or 20 per cent to $35.70.
"At times like these where oil prices are low, and companies are looking for consolidation to take advantage of low prices, I think frequently you see stock deals because that way neither company is leveraging their balance sheet," Warne observed.
"It's still difficult to get financing in the marketplace."
The day's showing leaves the TSX just 29 points below where it started 2009 -- up from four-year-plus lows of about 7,500 three weeks ago.
New York's Dow Jones industrial average gained 497.48 points to 7,775.86. Wall Street's blue-chip index is up almost 19 per cent from its March 9 low.
The Nasdaq composite index jumped 98.5 points to 1,555.77 and the S&P 500 index moved up 54.38 points to 822.92 after the U.S. Treasury Department unveiled its plan to revive lending.
It would rely on the government's US$700-billion financial rescue fund, along with cheap loans from the Federal Reserve and the Federal Deposit Insurance Corp. This money would support private investors such as hedge funds in buying toxic assets from banks at marked-down prices. The taxpayers shoulder the bulk of the risk if those assets fall further.
Treasury Secretary Timothy Geithner pleaded for patience, saying work to rehabilitate the financial industry has to go forward despite "deep anger and outrage" over bad lending and investment practices.
"The actions that we're getting from a policy standpoint are very helpful in removing the sand from the gears," said Alan Gayle, an strategist at RidgeWorth Investments in New York.
"That is going to be good for the financials."
The Toronto financial sector rose sharply on the U.S. bank-aid plan, gaining nine per cent as Royal Bank (TSX:RY) added $2.69 to $37.94 and TD Bank (TSX:TD) moved up $4.24 to $45.50.
U.S. financials also surged. Citigroup was up 51 cents or 19.5 per cent to US$3.13 and Bank of America gained $1.61 or 26 per cent to US$7.80.
The TSX Venture Exchange rose 22.23 points to 924.03.
The Canadian dollar gained 1.12 cents to 81.8 cents US as the American dollar weakened on worries about inflation resulting from the taxpayer-supported plan to remove up to US$1 trillion in bad loans from the banks' balance sheets.
Higher oil prices coincided with the Suncor-PetroCan deal to boost the TSX energy sector 7.4 per cent. The May crude contract on the New York Mercantile Exchange moved up $1.73 to US$53.80 a barrel.
Advancers included EnCana Corp. (TSX:ECA), up $4.15 to $55.50 , and Canadian Natural Resources (TSX:CNQ), up $4.29 to $52.96.
The base metals sector rose nine per cent. Teck Cominco Ltd. (TSX:TCK.B) moved ahead 76 cents to $6.64 and Equinox Minerals (TSX:EQN) improved 20 cents to $1.90.
The gold sector was the only decliner, down 1.2 per cent as the April bullion contract in New York moved down $3.70 to US$952.50 an ounce. Goldcorp Inc. (TSX:G) faded 49 cents to $41.82.
There was a bit of good news from the American housing sector. The National Association of Realtors said sales of existing homes grew 5.1 per cent in February compared with January. It was the largest sales jump since July 2003, against expectations of a decline.
Statistics Canada, meanwhile, reported that its gauge of future economic activity fell 1.1 per cent in February after a 0.9 per cent decrease in January.
