Mar. 11, 2009 (Baystreet.ca) --
12:25 pm EST
The financial sector led the way to a second session of impressive gains on the Toronto stock market Wednesday.
New York markets also built on a strong advance that followed news that American financial services giant Citigroup Inc. was operating at a profit for the first two months of this year.
Toronto's S&P/TSX composite index was still ahead by noon, 133.27 points to 8,013.68, after rising 313 points or 4% on Tuesday, 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 had another surge as Manulife Financial edged up 81 cents to $11.69 and Royal Bank climbed $1.04 to $33.98.
Bank of Montreal rose 74 cents to $30.45 as it announced a preferred share issue worth $150 million to $225 million paying 6.5% annually. BMO had previously bulked up its capital in December with a $1-billion issue of common shares and $450 million in 99-year notes that pay 10.2% interest and qualify as Tier 1 capital.
The energy sector rose despite the release of a report from the U.S. Department of Energy showing that crude supplies in the U.S. climbed unexpectedly by 700,000 barrels last week against an expected drop of one million barrels.
The gold sector was up as Goldcorp Inc. climbed $1.54 to $35.53.
Base metal stocks also made headway with Teck Cominco Ltd. ahead 58 cents to $4.67 and FNX Mining rising 32 cents to $3.95.
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 35 cents to $7.25 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.
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.
Descartes Systems Group, which provides logistics services and software to the freight-carrying industries, says reduced tax recoveries pushed down its quarterly profit to $15.7 million U.S., down from $17.9 million a year earlier. Its shares were ahead 22 cents to $3.
The Canadian dollar rose 0.15 cents to 78.21 cents US.
BAYSTREET
In Toronto, nine of the 13 TSX subgroups were still fixing their gaze upward, gold leading the attack with a 5.9% surge, followed by materials, up 5.4% and metals and mining, ahead 3.9%.
The four losing groups were weighed down by telecoms, off 0.9%, consumer staples, down 0.4% and energy, down 0.1%.
The TSX Venture Exchange gained 4.31 points to 822.68, while the Nasdaq Canada index charged ahead 14.16 at lunchtime to 406.56.
ON WALLSTREET
The Dow Jones Industrials Exchange was off its highs by noon local time, but still marginally ahead, nine points, to 6,935.49. The S&P 500 index advanced 2.97 to 722.57, while the Nasdaq Composite Index was in the green 9.55 points to 1,367.83
Citigroup's news energized financial stocks, which have been languishing under increased worries about nationalizing American banks and a run of bad news from U.S. financial institutions including the $62-billion U.S. loss handed in by insurer American International Group Inc. last week.
Citi shares rose another 16 cents or 10% to $1.61 U.S. after surging 38% Tuesday.
The big question Wednesday was whether the market could maintain its momentum throughout the day.
On the economic front, the February Treasury budget is due at 2 p.m. ET. Meanwhile, in Washington, the congressional oversight panel will release a report on the oversight of the Troubled Asset Relief Program (TARP), or the bank bailout plan.
Treasury prices inched lower, raising the yield on the benchmark 10-year note to 3.01% from 3% Tuesday. Treasury prices and yields move in opposite directions.
The April crude contract in New York moved down 30 cents to $45.41 U.S. a barrel.
The April bullion contract on the Nymex was up $5 to $900.90 U.S. an ounce