Banks lead markets higher

Mar. 10, 2009 (Baystreet.ca) --

04:35 pm EST Stock markets in Toronto and New York surged after positive earnings news from American banking giant Citigroup Inc. sent investors piling into beaten down financial stocks.

Toronto's S&P/TSX composite index gained 312.49 points to 7,879.43.

The Toronto financial sector rose in the wake of the Citigroup report. Royal Bank was up $3.28 to $32.07 while insurer Manulife Financial advanced $1.45 or 16% to $10.65.

Laurentian Bank shares added 94 cents to $25.70 after CEO Rejean Robitaille said that the country's seventh-largest bank is in a good position to expand after its best financial performance ever in 2008. The bank posted record net profits of $102.5 million, 8% higher than the previous year.

The market also got support from energy stocks even as oil moved lower. The price surged as high as $48.32 U.S. after OPEC signalled it will likely announce another production cut within days but stepped back after the U.S. Energy Department said the price of oil will average $42 U.S. a barrel this year and $53 U.S. next year.

Just a month ago, it said it expected prices to average $43 U.S. and $55 U.S., respectively.

Petro-Canada improved $1.12 to $27.61 while Canadian Natural Resources gained $2.17 to $45.57.

The base metals sector took off, with Teck Cominco Ltd ahead 30 cents to $4.02 and FNX Mining jumping 34 cents to $3.52.

Shares in HudBay Minerals Inc rose 20 cents to $5.91 after it announced the resignation of Allen Palmiere as chief executive officer and a member of the board, effective immediately. His departure comes as a major shareholder seeks to shake up the mining company's board of directors after the collapse of HudBay's proposed merger with Lundin Mining Corp.

Other heavyweight stocks pushing the Toronto market higher included Research In Motion Ltd. up $3.30 to $49.25. The BlackBerry maker has announced that it will sponsor the upcoming tour of Irish supergroup U2.

U2 previously had a highly publicized relationship with Apple.

Potash Corp. ran up $5.42 to $95.45 while Bombardier Inc.gained 38 cents to $2.72.

Among gold stocks, Barrick Gold Corp. declined $2.56 to $33.68. Iamgold Corp.said after the market close Monday it was planning to issue $275 million worth of shares to replace existing financing for its Essakane project in western Africa. Its shares were down $1.16 to $8.27.

The TMX Group Inc. is helping the London Stock Exchange Group develop its European derivatives market and may take an equity stake in EDX London. TMX shares rose $2.05 to $31.84.

Stem Cell Therapeutics was down half a cent to seven cents, giving back almost all of Monday's 7% surge after President Barack Obama lifted the contentious Bush-era restraints on stem-cell research.

The Canadian dollar gained back 0.91 cents worth of muscle Tuesday to close at 77.81 cents U.S.,

BAYSTREET Of the 13 TSX sub-groups, 11 were pointed higher, led by an 11.9% percent climb by financials, a 6.7% improvement by industrials and a 5.9% hike by metals and mining stocks.

The two laggards were gold, down 7.1% and materials, off 3.1%.

The TSX Venture Exchange raised itself 4.36 points to 818.55, while the Nasdaq Canada index jumped 29.47 points to 393.06

ON WALLSTREET The Dow Jones industrial average took part in the good times, too, soaring 379.44 points to close the day at 6,926.49

The S&P 500 index added 43.07 points to 719.60 while the Nasdaq composite index tacked on 89.64 to 1,358.28

Citigroup CEO Vikram Pandit said in a letter to employees that the first-quarter performance so far has been the bank's best since the last time it recorded net income for a full quarter - that was in the July-September period in 2007.

Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion U.S. for the full quarter.

He didn't mention how large the special items, such as credit losses and writedowns, are.

Citigroup's stock has taken a beating in recent weeks, following below $1 U.S. at one point last week, as the U.S. government increases its stake in the bank. Its shares ran up 38 cents or 37% to $1.43 U.S.

Stocks also moved ahead after Federal Reserve chairman Ben Bernanke outlined measures to prevent another financial crisis.

This would include legislation so the failure of a huge financial institution can be handled in an orderly way - similar to how bank failures are handled by the Federal Deposit Insurance Corp. - to minimize fallout to the financial system and to the national economy.

Moreover, such "too big to fail" companies must be subject to more rigorous supervision to prevent them from taking excessive risk, Bernanke said.

Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.97% from 2.87% Friday. Treasury prices and yields move in opposite directions.

The April crude contract on the New York Mercantile Exchange lost 89 cents to $46.18 U.S. a barrel.

The April bullion contract in New York moved $22.10 lower to $895.90 U.S. an ounce.