Roundup: Uptick in oil prices lifts Canadian stocks higher

Canada's main stock market in Toronto was pushed higher Tuesday by recovering crude oil prices after OPEC called for production cut.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 188.16 points, or 1.55 percent, to close at 12,331.32 points. All of the TSX index's eight main sectors turned positive.

International oil trading was buoyant throughout the day as the Organization of the Petroleum Exporting Countries made renewed calls for rival producers to cut supply alongside its members.

OPEC's secretary-general Abdullah al-Badri said the cartel is ready to negotiate with rivals to get prices to rise again, expressing concern that new investment in oil might be threatened.

Saudi oil giant Aramco's CEO Amin Nasser said Tuesday he expects higher prices by the end of this year as the gap between supply and demand is shrinking. That's because cheaper oil has forced non-OPEC producers, including Canada and the U.S., to reduce production, while global demand is rising.

The West Texas Intermediate oil contract, which had fallen below 30 U.S. dollars on Monday, was up 3 percent in North American trading to 31.45 dollars a barrel.

Brent crude, the main international contract, increased 1.3 dollars to close at 31.8 dollars a barrel on the London ICE Futures Exchange.

TSX resource companies were buoyed up with a 4.01 percent lift. Calgary-based Baytex Energy Corp. moved up 11.20 percent to 2.68 Canadian dollars a share, Trican Well Service Ltd. shot up 84.00 percent to 1.38 dollars a share, and Surge Energy Inc. surged 10.17 percent to 1.95 dollars a share.

Canadian retailer Metro Inc. fell 3.84 percent to 40.27 Canadian dollars a share after the Montreal-based company posted an all-time high on better-than-expected profit and a hike in its dividend.

North American investors were also watching Federal Reserve's two-day policy meeting which started Tuesday, as the U.S. central bank makes its first review of the economy since deciding to raise rates in December.

"Markets should start to calm down as we get ready for the Federal Reserve announcement Wednesday afternoon," said Michael J Smith, a Toronto currency expert at AFEX, a global non-bank provider of foreign currency services.

Global stocks have had a rocky start to 2016 due to concerns over global growth slowdown and plunging crude prices, and with investors struggling to find safe haven investments.

Spooked by market volatility, risk-averse Canadians are hoarding 75 billion Canadian dollars in extra cash, according to a report from CIBC Economics.

Personal cash positions are at record levels, according to CIBC deputy chief economist Benjamin Tal, and that's short-changing the Canadian economy, he said.

"From a broader perspective, the Canadian economy is losing out because capital is not being allocated efficiently," Tal said.

Canadians started building up their cash assets in savings and chequing accounts during the 2008 crash caused by failing banks and they're building on that hoard, he said. The flight to cash amid recent market turmoil was the fastest seen since 2012. Cash holdings are up 11 percent in the past year.

He admits the stock market is a "scary place" right now but investors also risk missing the recovery as scenarios in 1987, 2001, and 2008. The TSX has fallen 6.7 percent since the beginning of the year and is at a two-year low.

The Canadian stock market has been affected by the drop in commodity prices and has fallen as if it were an emerging market, Tal said. But that's overshooting the fundamentals, he added.

The Canadian dollar rose almost a cent to 0.7105 U.S. dollar at the close of trading, compared with Monday's closing rate of 0.7008 U.S. dollar. Enditem