China optimism helps send TSX higher; Allergan rejects hostile Valeant bid
TORONTO - Rising miners helped give the Toronto stock market a solid gain Monday as copper prices jumped in response to moves to open up Chinese markets.
The S&P/TSX composite index ran ahead 120.88 points to 14,654.94.
Base metal miners advanced after China's cabinet promised late last week to allow local governments to issue bonds and streamline the approval process for initial public stock offerings, a move that was seen as widening market access.
At the same time, analysts say markets have become more comfortable with more realistic growth expectations from the world's second-biggest economy.
"Weâ€™re no longer talking about double-digit growth," said Monika Skiba, senior portfolio manager at Manulife Asset Management.
"But I think as long as we see seven, 7.5 per cent GDP growth, and I think thatâ€™s what the Chinese government seems to be comfortable with as well, that bodes well for commodities in terms of being stable. And itâ€™s also good for the Canadian market."
The Canadian dollar edged 0.01 of a cent lower to 91.77 cents US.
On the merger and acquisition front, Botox-maker Allergan rejected the US$48-billion hostile takeover bid by Quebec-based Valeant Pharmaceuticals International Inc. (TSX:VRX). It says the bid undervalues Allergan, isnâ€™t in the best interests of the U.S. company and creates risks and uncertainties for its shareholders. The California-based company also says the offer doesnâ€™t reflect its future earnings and growth. Valeant shares dropped 98 cents to $141.98.
U.S. indexes were higher as the Dow industrials and the S&P 500 index racked up fresh record closes, with the Dow jumping 112.13 points to 16,695.47 and the S&P ahead 18.17 points at 1,896.65. The Nasdaq gained 71.99 points to 4,143.86.
The base metals sector led TSX advancers, up 3.89 per cent as July copper gained seven cents to US$3.15 a pound.
June bullion added $8.20 to US$1,295.80, pushing the gold sector up about one per cent.
The energy sector climbed 1.32 per cent as June crude ran up 60 cents to US$100.59 a barrel.
In other M&A developments, Hillshire Brands, which makes Hillshire Farm lunch meats, Jimmy Dean sausages and Ball Park franks, is buying Pinnacle Foods in a deal valued at US$4.23 billion. Among Pinnacleâ€™s brands are Birds Eye frozen vegetables, Duncan Hines cakes mixes and Hungry-Man frozen dinners.
Traders also kept a wary eye on the Ukraine crisis as pro-Russian insurgents in the countryâ€™s Donetsk region declared it an independent state and asked to join Russia after a hastily organized referendum in which organizers say overwhelming numbers of voters backed sovereignty.
Meanwhile, the European Union added 13 more people and two enterprises to its list for visa bans and asset freezes aimed at punishing Russia for its position on Ukraine.
Investors also looked ahead to a busy week for economic news that should reassure investors that the U.S. economy is recovering from the damage caused by a severe winter.
The April reading on U.S. retail sales will be released on Tuesday, capacity utilization and industrial production data on Thursday and April housing stars numbers along with the May reading on consumer confidence from the University of Michigan on Friday.
Together, they are expected to indicate that the U.S. economy will run ahead 3.8 per cent in the second quarter after likely contracting in the January-March period.
Statistics Canada releases the March report on manufacturing shipments on Thursday.
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