TORONTO - North American stock markets higher Monday as commodities strengthened and investor confidence was bolstered by the U.S. government's bailout plan for Citigroup.
Toronto's S&P/TSX composite index gained 285.48 points to 8,440.87, and the Canadian dollar surged 2.70 cents to 81 cents US on a weaker greenback.
Leading the TSX gain were energy stocks, ahead 7.6 per cent, on a boost from a higher price for oil. The January crude contract was up $4.57 to close at US$54.50 a barrel on the Nymex.
Financials stocks also grabbed attention on both sides of the border.
Wall Street markets were all ahead at least five per cent as traders were heartened by the U.S. government's weekend announcement of a plan to bail out Citigroup Inc. -- a decision aimed at easing uncertainty in the financial sector.
The Dow Jones industrial average rose 396.97 points to 8,443.39. The Nasdaq composite was ahead 87.67 points at 1,472.02 and the S&P 500 moved up 51.78 to 851.81.
The move by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. is the latest effort this year to support the U.S. banking system -- adding to a $700-billion rescue for the overall financial sector, a massive bailout of American International Group and the government takeover of mortgage lenders Fannie Mae and Freddie Mac.
BCE Inc. shares (TSX:BCE) rose nearly 10 per cent from the Citigroup arrangement on optimism that the $52-billion purchase of Canada's largest telecom company will go ahead. The bank is a lead lender in the transaction, and BCE stock gained $3.39 to $37.94.
Jim Baird, chief investment strategist with Plante Moran Financial Advisors, said Wall Street is relieved by the government's decision to help prop up Citigroup but he predicted that the initial enthusiasm could give way to further questions about the effectiveness of the government's array of efforts to sew up problems in the financial sector.
"I think, at a minimum, what you're seeing today is some relief that, first of all, they're stepping in to do something," he said. "There's still more questions than answers surrounding whether what's been done is going be enough."
On the TSX, financials stocks gained 4.7 per cent after Royal Bank (TSX:RY) said it will report a profit of $1.1 billion. That's down 15 per cent from a year ago on charges related to the shakeup in financial markets but all of the Canadian bank stocks have already declined in the past week in anticipation of lowered profits.
Shares in Canada's largest bank, which reports Dec. 5, slipped at the open, then shifted higher, up $2.52 at $39.
Fred Ketchen, equity trading manager at Scotia Capital said that Royal Bank's disclosure offers another bit of clarity to the bank earnings season, which kicks off on Tuesday with the Bank of Montreal (TSX:BMO).
"I guess that sort of relieves some nagging worries that people have had," he said. "It'll be interesting to see what these banks are going to report."
Last week, TD Bank (TSX:TD) and Scotiabank (TSX:BNS) previewed their expected losses for the fourth quarter, though both won't release their full results until next week.
TD announced after the markets closed Monday that it will raise $1.2 billion in an issue of common shares. The bank said it will issue 30.4 million shares at a price of $39.50 per share -- a discount to Monday's closing price of $42.90 and but above a 52-week low of $38.33 established earlier in the day.
Crude oil rose $4.57 to close at US$54.50 a barrel on the New York Mercantile Exchange. The TSX energy sector moved ahead 7.1 per cent.
Mining stocks were up 6.8 per cent. Hudbay Minerals (TSX:HBM) moved up five per cent, rising 15 cents to $3.31. The shares had fallen
The gold index gained 1.5 per cent as December bullion closed ahead $27.70 to US$819.50 an ounce.
The TSX Venture Exchange rose 18.62 to 722.79.
Also pushing a brighter economic outlook was president-elect Barack Obama who formally named his economic team Monday, though he skipped any further deails on his economic stimulus plan.
The Conference Board of Canada reported that its consumer confidence index fell again this month, losing 2.9 points to 71. The think-tank notes that consumer sentiment as at "depths previously reached only in 1982 and 1990, which were both periods of recession."
Investors cheered the prospect of fiscal stimulus for the overall economy. In Canada, Prime Minister Stephen Harper and Finance Minister Jim Flaherty have indicated they plan deficit spending.
Gran Tierra Energy (TSX:GTE) shares fell eight per cent after the company suspended production in two oilfields in southern Colombia due to a general strike in the region. Gran Tierra stock crumbled throughout the day before returning to where it opened, closing even at $2.94.
NovaGold Resources Inc. (TSX:NG) shares plummeted 67 per cent after the company said it's suspending operations at Rock Creek because it has been unable to raise new money and faces being unable to meet its financial obligations next month. Stock slid $1.48 to 72 cents.
Health care company Johnson & Johnson plans to acquire Omrix Biopharmaceuticals Inc. for US$438 million -- or $25 per share -- in a plan to expand its surgical product unit.
