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TSX Settles Higher On Resource Stocks - Canadian Commentary

Canadian stocks made impressive gains to close higher Wednesday, led by resource stocks and some encouraging earnings data from the U.S. Investors shrugged off the Federal Reserve decision indicative of no major shifts in its accommodative monetary policy, despite a slightly more downbeat assessment of the economic recovery.

Toronto's main index, the S&P/TSX, closed Wednesday at 12,111.06, up 130.96 points or 1.09 percent. The S&P/TSX Composite Index touched an intraday high of 12,112.22 and a low of 11,997.31.

The TSX Venture Index closed at 1,371.12, up 5.35 points or 0.39 percent. The index opened at 1,372.24 compared to its previous close of 1,365.77.

All major components of the S&P/TSX Index were in positive territory, with the exception of the Telecommunications Index which was down nearly 2 percent.

The Metals & Mining Index jumped 3.09 percent, driven by First Quantum Minerals Ltd. (FM.TO) that gained 5.92 percent and Cline Mining Corp. (CMK.TO) up 13.25 percent. Teck Resources Limited (TCK_B.TO) gained 2.73 percent, while Lundin Mining Corp. (LUN.TO) gained 4.34 percent.

The weekly report from the Energy Information Administration revealed US crude oil inventories jumped by 4.00 million barrels, while gasoline stocks dipped 2.20 million barrels in the weekended April 20. Analysts expected crude oil inventories to add 1.50 million barrels, while gasoline stocks were expected to drop by 500,000 barrels last week.

Light Sweet Crude Oil futures for June delivery, gained $0.55 or 0.5 percent to close at $104.12 a barrel on the NYMEX Wednesday.

The Energy Index gained 2.04 percent with Canadian Natural Resources Limited (CNQ.TO) adding 3.42 percent and Suncor Energy Inc. up 1.35 percent. Petrobakken Energy (PBN.TO) slipped 0.42 percent, while Talisman Energy Inc. (TLM.TO) gained 3.83 percent.

Encana Corp. (ECA.TO) moved up 4.02 percent after a turn to first-quarter profit of $12 million or $0.02 per share, compared to a loss last year. Operating earnings were $240 million or $0.33 per share, up from a year ago.

The Financial Index moved up 0.33 percent, with Royal Bank of Canada (RY.TO) up 0.64 percent, Bank of Nova Scotia (BNS.TO) up 0.22 percent. The Toronto-Dominion Bank (TD.TO) inched up 0.16 percent.

Smartphone maker Research In Motion (RIM.TO) was up 2.60 percent, while transportation systems maker Bombardier (BBD.B.TO) edged up 0.25 percent.

The Materials Index rose 2.78 percent, with Inmet Mining (IMN.TO) up 3.88 percent and First Quantum Minerals Ltd. (FM.TO) gaining 5.92 percent each. Potash Corporation of Saskatchewan Inc. (POT.TO) gained 3.85 percent, while Uranium One Inc. (UUU.TO) edged up 1.06 percent.

IT and business processing services provider CGI Group Inc. (GIB_A.TO) gained over 5 percent despite reporting d a lower second quarter net earnings of C$105.7 million or C$0.40 per share compared to C$118.7 million or C$0.43 per share in the same quarter last year. Analysts expected earnings of C$0.41 per share for the quarter.

Gold for June delivery dropped $1.5 or 0.1 percent to close at $1,642.30 an ounce Wednesday on the NYMEX. The Global Gold Index gained 2.43 percent.

Among gold stocks, Kinross Gold Corp. (K.TO) gained nearly 2 percent, while Eldorado Gold Corp. (ELD.TO) gained 4.79 percent. Goldcorp Inc. (G.TO) moved up 1.35 percent, while Lake Shore Gold Corp. (LSG.TO) surged 8.0 percent. Barrick Gold Corp. (ABX.TO) gained a modest 0.49 percent.

Gold and silver ore mining company Aberdeen International (AAB.TO) surged over 6 percent after announcing plans to sell 1 percent net smelter return royalty on gold produced from certain mineral concessions to Premier Royalty Corporation, wholly-owned by Premier Gold Mines Limited (PG.TO) for $20.90 million.

Meanwhile, communications and media company Rogers Communications (RCI_B.TO) plunged 5.66 percent after reporting d a lower first-quarter profit of C$305 million or C$0.57 per share, with adjusted earnings also declining to C$0.67 per share. This compared with analysts earnings estimate of C$0.76 per share for the quarter.

The Federal Open Market Committee once again refrained from a third round of quantitative easing. Members also elected to not extend Operation Twist, the Fed's sale of medium-term bonds to buy longer-term bonds, past its expiration in June.

The Fed decision to keep its benchmark rate at effectively zero was in line with economist expectations and did not waver from its conditional pledge to keep rates at historic lows until late 2014. The Fed indicated "economic growth to remain moderate over coming quarters and then to pick up gradually."

In economic news, the U.S. Commerce Department's advance estimates of new durable goods orders for the month came in at $202.6 billion, a 4.2 percent decrease from February levels, marking the largest monthly decline since January 2009. Most economists predicted durable goods orders to fall from February levels but the market generally expected a much less severe drop of around 1.5 percent.

From the eurozone, the U.K. economy unexpectedly contracted for the second straight time in the first quarter, the Office for National Statistics showed today. Gross domestic product dropped 0.2 percent sequentially, while economists forecast a 0.1 percent expansion. This follows a 0.3 percent drop in the fourth quarter 2011.

by RTTNews Staff Writer

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