[TORONTO, ON] - The Toronto stock market headed higher Monday as traders took in a multibillion-dollar offer for a Canadian miner and a Statistics Canada report that showed the economy grew faster than expected in December.
The S&P/TSX composite index moved up 98.4 points to 14,150.5 with the mining and materials sectors leading all major indexes into positive territory.
The TSX Venture Exchange gained 14.17 points to 2,389.79.
The Canadian dollar rose 0.49 of a cent to 102.67 cents US, bolstered by the better than expected economic report and as the greenback lost ground against most other major currencies.
Statistics Canada said the annualized rate of GDP rose 3.3 per cent in the fourth quarter after expanding 1.8 in the third quarter. That was significantly stronger than the 2.3 per cent pace the Bank of Canada expected in December.
Gross domestic product grew 3.1 per cent in 2010 after a 2.5 per cent decline in 2009.
“Real GDP growth in the fourth quarter of 2010 beat the Bank of Canada's January forecast by a full percentage point,” said Diana Petramala, an economist at TD Bank.
“If Canadian real GDP growth continues at this pace, the economy will be operating at full capacity by the end of this year - slightly ahead of when the Bank of Canada predicted back in January.”
The figures could put pressure on the central bank to raise interest rates sooner than expected. The Bank of Canada is expected to provide some insight into where it plans to go when it makes its next intersect rate announcement Tuesday.
Douglas Porter, deputy chief economist at Bank of Montreal said the upbeat report begins to tip the balance back in favour of earlier rate hikes.
“We had been looking for the Bank to wait until their July meeting before restarting the rate hike process, and are still comfortable with that call. But, if there is a surprise to our rate call, it now looks like the Bank would go earlier, rather than wait longer.”
Meanwhile, the April gold contract added $5.50 to US$1,414.80 an ounce on the New York Mercantile Exchange, while copper gained four cents to US$4.48 a pound.
Oil prices lost eight cents to US$97.80 a barrel after spiking last week as Libya's violent power struggle disrupted crude output.
The jump in oil prices to over US$103 a barrel last Thursday raised concerns that sharply higher prices would derail what is a fragile economic recovery in many parts of the world. But crude ended the week at US$97.88 amid signs the crisis in Libya may have cut crude supplies less than previously estimated.
Markets have started off the week seemingly more comfortable with political risk as equities have been rebounding while crude oil has drifted back a bit. The TSX finished last week down about 70 points as the wave of unrest in the Middle East persuaded investors to take some profits from a lengthy rally.
Investors will have plenty to chew on this week, including the direction of volatile oil prices,and a busy week of earnings reports from Canadian banks and other companies.
In corporate news, shares in Lundin Mining Corp. soared 19 per cent or $1.20 to $7.65 after Equinox Minerals Ltd. confirmed that it will make an offer to acquire the Vancouver-based miner for C$4.8 billion in cash and shares.
Equinox said late Sunday that Lundin shareholders can choose between $8.10 per share in cash, which is a 26 per cent premium to Friday's closing price of $6.45, or 1.2903 Equinox shares plus one cent for each Lundin share.
The news comes less than a month after Lundin signed a merger of equals deal with Inmet Mining Corp. aimed at creating a new company called Symterra Corp., with shareholder votes scheduled for March 14.
Inmet shares fell $1.28 to $66.02, while Equinox stock was off eight per cent or 50 cents at $5.77.
RioCan Real Estate Investment Trust reported fourth-quarter profits rose 551 per cent to $179.4 million, from $27.5 million a year ago, as it benefited from a one-time non-cash reversal on future income taxes worth $150 million. Units in the trust added 58 cents to $24.36.
Quadra FNX Mining Ltd. shares gained five per cent or 67 cents to $14.19 after it reported fourth-quarter net earnings of US$57.9 million or 30 cents per diluted share, compared with US$46.5 million or 46 cents in the same 2009 period. Revenues for the three months ended Dec. 31 were US$331.9 million, up from US$176.1 million.
Wall Street markets mostly headed higher. The Dow Jones industrial average was up 93.7 points at 12,224.1, the Nasdaq lost 10.65 points to 2,791.7 and the broader S&P 500 index rose 8.25 points to 1,328.15.
In U.S. economic news, the National Association of Realtors said its index of sales agreements for previously occupied homes fell 2.8 per cent last month to a reading of 88.9, the second straight monthly decline.
Meanwhile, the U.S. Commerce Department reported that consumer incomes rose by the largest amount in nearly two years in January thanks to a tax cut that began last month. Spending rose only 0.2 per cent, however, a sign that many people are still uncertain about the strength of the economic recovery.
A more closely watched economic update will come later in the week when the U.S. government releases its employment report for January. Economists expect it to show the strongest job growth since May 2010.
The FTSE 100 index of leading British shares was up 0.18 per cent while Germany's DAX rose 1.45 per cent. The CAC-40 in Paris gained 1.3 per cent.