Energy stocks support TSX on final day of Q2 trading; New York positive

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market moved higher in early trading Tuesday as investors bought up energy stocks and took in news that the economy was still shrinking during April - but at a slower pace than the previous month.

The S&P/TSX composite index gained 23.5 points to 10,500.2 on the last day of second quarter trading. The Toronto market is closed Wednesday for Canada Day.

Statistics Canada said real gross domestic product fell in April by 0.1 per cent. GDP shrank by 0.3 per cent the previous month.

The main index is coming off a five-session string of advances and rose 87 points on Monday thanks to rising oil and banking stocks.

The rise was the latest positive showing in the April-June period that has seen the TSX jump 20 per cent.

The Dow Jones industrial average is ahead 12 per cent and the S&P 500 16 per cent.

"It's been a good quarter overall," said Janet Engels, director of private client research at RBC Wealth Management.

"I think everyone is just going to be looking to end the quarter and lock in some gains."

Analysts say the quarter saw a continuation of the big change in sentiment that took root in early March. Investors stopped pricing in a depression-like scenario and instead concentrated on so-called green shoots - data that indicated economies were close to getting out of recession and possibly into a recovery by the end of the year.

But they also say investors are no longer content to settle for news that is merely "less bad" and are nervous that the economy's rebound won't be as robust as envisaged. This fear has recently put a dent in the market's advance that started March 10 and at one point had sent indexes in Toronto and New York up around 35 per cent.

The TSX energy sector rose almost one per cent Tuesday as the August crude contract on the New York Mercantile Exchange lost 43 cents to US$71.06 a barrel. But hopes for higher demand have driven the price of oil up 40 per cent in the second quarter.

Suncor Inc. (TSX: SU.TO) gained 37 cents to $35.77.

The Canadian dollar rose 0.12 of a cent to 86.57 cents US.

The TSX Venture Exchange added 1.71 points to 1,107.27.

New York markets were up slightly ahead of the latest reading on consumer confidence later in the morning.

The Dow Jones industrial average gained 17.1 points to 8,546.5 following a 91-point surge.

The Nasdaq composite index rose 8.08 points to 1,852.14 while the S&P 500 gained 0.65 of a point to 927.9.

There was also some positive news from the U.S. housing sector indicating that home price declines are moderating.

The Standard&Poor's/Case-Shiller index showed home prices in 20 major cities tumbled by 18.1 per cent from April 2008.

April, however, marked the third straight month both indexes didn't set record price declines. And yearly losses in 13 metros improved compared to March.

Investors will also take in a key report on the manufacturing sector Wednesday, while Thursday brings the much anticipated monthly jobs report.

The TSX base metals sector, up 73 per cent during the quarter, rose almost one per cent on Tuesday. Teck Resources (TSX: TCK-B.TO), the best performing stock on the TSX during the quarter, rose 24 cents to $18.82. Teck stock has surged 163 per cent since March 31.

The financials sector was the biggest TSX drag, down 0.5 per cent.

The August bullion contract in New York was down $6.60 to US$934.10 an ounce.

U.S. markets are closed Friday in observance of the Independence Day holiday.

In overseas trading, Japan's Nikkei 225 rose 174.97 points, or 1.8 per cent, to 9,958.44, while Hong Kong's Hang Seng reversed early gains to close down 149.78, or 0.8 per cent, at 18,378.73

London's FTSE 100 dipped 0.2 per cent, Frankfurt's DAX was off 0.06 per cent while the Paris CAC 40 was down 0.4 per cent.