Markets build on Tuesday's gains

Mar. 11, 2009 (Baystreet.ca) --

10:26 am EST Stock markets were higher Wednesday, building on the huge gains racked up Tuesday following news that American financial services giant Citigroup Inc. was operating at a profit.

Toronto's S&P/TSX composite index gained 140.66 points to 8.021.07 after a 12% jump in the financial sector helped drive the main index up 313 points or 4%, its biggest gain this year.

Analysts say that Tuesday's rally was also fed by short covering, which occurs when investors need to buy stock to replace shares that were borrowed and then sold on expectations of a market decline.

Investors also took in comments from U.S. Treasury Secretary Timothy Geithner that the Obama administration will unveil the government's plan for dealing with banks' toxic assets within the next couple of weeks.

During an interview aired Tuesday night on "The Charlie Rose Show," Geithner said the plan the administration has put together will provide financing to private investors who are willing to buy banks' bad assets. He predicted the plan will succeed but will take time to work.

The TSX financial sector was up as Manulife Financial edged up 62 cents to $11.50 and Bank of Montreal rose 94 cents to $30.65.

Oil stocks were under some pressure, even as a senior Kuwaiti official says OPEC is likely to announce a production cut during its meeting Sunday in Vienna. Petro-Canada lost 30 cents to $27.59 and Suncor Inc. gave back 61 cents to $29.80.

Supreme Petroleum Council member Emad al-Atiqi says the cartel's decision "is expected to be endorsed unanimously due to what is happening with prices."

The gold sector was up, as Goldcorp Inc. climbed 51 cents to $34.50.

Bombardier Inc. shares jumped 29 cents to $2.88 after it said Wednesday it had finalized an agreement to build 30 of its CS100 jets at a price of $1.5 billion U.S. for Germany's Deutsch Lufthansa AG.

Shares in travel operator Transat A.T. Inc. fell $1.09 to $6.51 after it reported a sharp increase in its first quarter loss and added it was also suspending its quarterly dividend in order to conserve cash during the global economic slump.

The Montreal-based company said its quarterly loss jumped to $29.4 million from $7.9 million from the previous year.

The Canadian dollar rose 0.07 cents to 78.13 cents US.

BAYSTREET

In Toronto, 12 of the 13 TSX subgroups started the day ahead, metals and mining leading the charge, ahead 3.7%, financials up 3.3% and industrials up 2.1%.

Meanwhile, consumer staples were off 0.6%, the lone losing group.

The TSX Venture Exchange gained 2.19 points to 820.74, while the Nasdaq Canada index gained 11.07 to start the day's trading at 403.47.

ON WALLSTREET

The Dow Jones Industrials Exchange built upon Tuesday's massive gains by picking up 66.43 more points, to 6,992.92. The S&P 500 index advanced 8.82 to 728.42, while the Nasdaq Composite Index picked up 19.83 points to 1,378.11.

Citigroup's news energized financial stocks which have been languishing because of increased worries about nationalizing American banks and a run of bad news from U.S. financial institutions, including a huge $62-billion U.S. loss handed in by insurer American International Group Inc. last week.

Citi shares rose another 23 cents to $1.68 U.S. after surging 38% Tuesday.

The big question Wednesday was whether the market could maintain its momentum throughout the day.

Office products retailer Staples Inc. said its fiscal fourth-quarter profit dropped 14% amid a number of charges related to an acquisition. The company reported a 16% jump in sales. But both sales and adjusted earnings missed Wall Street expectations.

The April crude contract in New York moved down 87 cents to $44.84 U.S. a barrel.

The April bullion contract on the Nymex was up $4.20 to $900.10 U.S. an ounce