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* TSX closes up 113.72 points, or 0.74 percent, at 15,516.75
* Index posts highest close since September 2014
* Eight of the TSX's 10 main groups end higher
By Fergal Smith
TORONTO, Jan 4 Canada's main stock index rose on
Wednesday to its highest close since September 2014, when it
reached a record high, as investors bet that the rally in oil
prices will lead to better growth in corporate earnings.
It was the second straight day of gains for the index after
it surged 17.5 percent in 2016.
The market is pricing in better earnings growth for the
first quarter following the rebound in crude oil from its
February 2016 trough, said Kevin Headland, senior investment
strategist at Manulife Investments. "Canadian earnings typically
are highly correlated with energy on a year-over-year basis," he
U.S. crude oil prices settled 93 cents higher at
$53.26 a barrel on expectations that U.S. crude inventories have
dropped and on signs that the world's top oil exporters will
stick to agreed output cuts that took effect this week.
Canada is a major producer of oil, which bottomed last
February at $26.05.
The most influential movers on the index included its
biggest bank, Royal Bank of Canada, which rose 1.5
percent to C$92.84, and Encana Corp, which jumped 7.2
percent to C$17.22.
The oil and natural gas producer said it expects its margins
in 2017 to exceed a previous target on lower costs and an
expected rise in output in the second half of the year.
The broader energy group gained 0.3 percent, while
financials advanced 0.9 percent as insurer Manulife Financial
Corp added 1.1 percent and most of the country's big
banks pushed higher.
As oil rallies, banks benefit from reduced loan loss
provisions, while fewer job cuts and increased confidence
support consumer-related stocks, said Headland, who is
maintaining his exposure to Canadian stocks as the TSX
approaches its September 2014 record peak at 15,685.13. But he
added that sees less room for the index to rally than in 2016.
The Toronto Stock Exchange's S&P/TSX composite index
closed up 113.72 points, or 0.74 percent, at
15,516.75, its highest close since Sept. 12, 2014.
Eight of the index's 10 main groups ended higher.
WestJet Airlines Ltd rose 2.8 percent to C$23.73
and Canadian National Railway added 1.4 percent to
C$91.72, helping the industrials sector rise 1.4 percent.
The materials group, which includes precious and base metals
miners and fertilizer companies, added nearly 1 percent.
On the negative side of the ledger, major gold producer
Barrick Gold Corp slipped 1 percent.
(Additional reporting by Alastair Sharp; Editing by Meredith
Mazzilli and Dan Grebler)