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TSX Up In Positive Territory On Oil's Surge, Rate Cut Optimism

The Canadian stock market moved higher Wednesday morning, lifted by strong gains in the energy space after crude oil prices climbed up after data showed another weekly drop in U.S. crude inventories.

Investors were also reacting to the Bank of Canada's monetary policy statement and the Federal Reserve Chairman Jerome Powell's testimony that signaled the Fed will likely cut interest rates this month.

Powell said the central bank will "act as appropriate" to sustain expansion as "crosscurrents" are weighing on the economic outlook. He noted business investments across the U.S. have slowed "notably" recently.

The Bank of Canada today left its key interest rate unchanged at 1.75% for a sixth-straight meeting.

"Recent data show the Canadian economy is returning to potential growth," the central bank said in its accompanying statement.

"However, the outlook is clouded by persistent trade tensions. Taken together, the degree of accommodation being provided by the current policy interest rate remains appropriate," it added.

The bank said that it will continue to monitor data ahead of future decisions with a particular focus on developments in the energy sector and the effects of global trade tensions.

The bank downgraded its 2019 global growth forecast to 3% from 3.2% due to trade disputes. "Escalating trade conflicts, geopolitical tensions and related uncertainty are contributing to the broad-based slowdown of global economic activity," the bank said in its report.

The Canadian benchmark S&P/TSX Composite Index, which rose to 16,641.79, pared some gains subsequently, and was up 47.10 points, or 0.28%, at 16,592.31 about an hour before noon.

The Capped Energy Index surged up more than 2%. Parex Resources (PXT.TO), MEG Energy Corp. (MEG.TO), Crescent Point Energy (CPG.TO), Whitecap Resources (WCP.TO), Precision Drilling Corp. (PD.TO) and Encana Corp. (ECA.TO) moved up 3 to 6%.

Baytex Energy (BTE.TO), Tourmaline Oil Corp. (TOU.TO), Cenovus Energy (CVE.TO), Canadian Natural Resources (CNQ.TO), Enerflex (EFX.TO), ARC Resources (ARX.TO), PrairieSky Royalty (PSK.TO) and Vermilion Energy (VET.TO) also rose sharply.

In the mining space, Torex Gold Resources (TXG.TO) soared nearly 10%. Oceanagold Corp. (OGC.TO), Centerra Gold (CG.TO), Semafo (SMF.TO), Endeavour Mining (EDV.TO), Lundin Mining (LUN.TO) and Hudbay Minerals (HBM.TO) gained 2 to 4.3%.

SSR Mining (SSRM.TO), First Quantum Minerals (FM.TO), Detour Gold Corp. (DGC.TO), Iamgold Corp. (IMG.TO) and Eldorado Gold (ELD.TO) also posted notable gains.

Information technology stock Enghouse Systems (ENGH.TO) and consumer staples stock Premium Brand Holdings Corp. (PBH.TO) gained 1.8% and 1.4%, respectively.

Among bank stocks, Canadian Imperial Bank of Commerce (CM.TO), Toronto-Dominion Bank (TD.TO), Royal Bank of Canada (RY.TO) and Bank of Nova Scotia (BNS.TO) were modestly higher.

In commodities, crude oil futures for August were gaining $1.77, or 3.07%, at $59.60 a barrel after data from U.S. Energy Information Administration showed crude stockpiles fell by 9.5 million barrels in the week ended July 5, nearly five times the expected drop.

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