Canadian Markets: Canadian stocks gain on commodities, Fed

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SAN FRANCISCO (MarketWatch) ?€" Toronto?€™s main stock index closed higher Wednesday, getting a boost from commodities that rose on better-than-expected economic growth in China and on Federal Reserve chief Ben Bernanke?€™s remarks that the U.S. central bank would consider further stimulative measures if needed.

The S&P/TSX Composite Index /quotes/zigman/20942 CA:$ISPTX +0.35% closed 91 points higher, at 13,324.90.

The same factors driving the U.S. equity markets are behind the Toronto benchmark?€™s rally, BMO Capital Markets senior economist Sal Guatieri said.

Bernanke ?€œgave the QE3 door a slight opening,?€ while China reported stronger-than-forecast growth in gross domestic product for the second quarter, Guatieri said.

?€œQE3?€ is a reference to what would be a third round of quantitative easing undertaken by the Fed to help foster recovery in the U.S. economy. Quantitative easing is a part of a federal monetary policy program to buy bonds and keep interest rates low. In testimony before Congress, Bernanke said the Fed?€™s considering ?€œuntested steps?€ to stimulate the economy if conditions deteriorate. Read more about the Federal Reserve?€™s latest plans to stimulate growth.

Gold prices shines at new high

Gold?€™s bouncing to record levels, and skittish investors are flocking to it following uncertainty over news in Europe as well as at home.

The Chinese GDP growth explains why the Canadian stock market?€™s outpacing the Wall Street, Guatieri said: ?€œWe export a lot of commodities, and if China?€™s economy continues to grow strongly, and demand for commodities stays in line with their economy, prices will increase.?€

China?€™s National Bureau of Statistics reported the economy expanded 9.5% in the second quarter from a year earlier. Read more about China?€™s economic data.

Against that backdrop, the S&P/TSX Capped Materials Index /quotes/zigman/24976 XX:TTMT +0.70% gained 2.2%. Shares of Kinross Gold Corp. /quotes/zigman/31886 CA:K +1.16% added 1.3%, as gold futures /quotes/zigman/700181 GC1Q +0.33% climbed $23.20 to close at a record $1,585.50 an ounce. Read more about gold futures.

The S&P/TSX Capped Metals and Mining Index /quotes/zigman/24977 XX:TTMN +1.55% rose 1.5% as shares of Ivanhoe Mines /quotes/zigman/19098 CA:IVN +2.78% climbed 2.4%.

The S&P/TSX Capped Energy Index added 0.6%, while oil futures /quotes/zigman/2075824 CL1Q +1.88% gained 62 cents to close at $98.05 a barrel. Shares of Suncor Energy Inc. /quotes/zigman/43712 CA:SU +1.09% traded up 0.2%. Read more about oil futures.

The S&P/TSX Capped Financials Index /quotes/zigman/23265 XX:TTFS -0.40% gained 0.2%, with most of the country?€™s major banks posting gains. Shares of Bank of Montreal /quotes/zigman/16691 CA:BMO -0.34% added 0.8%.

In currencies, the Canadian dollar strengthened as the U.S. dollar /quotes/zigman/4867882/sampled USDCAD -0.0995% lost roughly 0.6% to buy 95.97 Canadian cents. Read more on currencies.

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