Canadian stocks surge as central bank keeps rate steady

Canada's main stock market in Toronto closed Wednesday at its highest level in more than nine months, fueled by gains in energy and bank stocks, as the country's central bank held its key interest rate unchanged.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index gained 100.89 point, or 0.72 percent, to close at 14,053.74 points. Six of the TSX index's eight main sub-sectors were higher.

The Bank of Canada maintained its target for the overnight rate at 0.5 percent, highlighting the economy would shrink in the second quarter as a result of damage from the massive Alberta wildfires before rebounding later in the year.

"This was a very uninspiring statement from the bank and they really said very little, no rate cuts in the foreseeable future so the expectation for that course of action may be diminishing," said Michael J Smith, a Toronto currency expert at AFEX, a global non-bank provider of foreign currency services.

TSX financials sector responded positively, helped by strength in shares of Bank of Montreal (BMO) after the lender reported quarterly results and gains in the energy sector following a jump in the oil price.

The BMO kicked off the Canadian bank earnings season by reporting a slightly lower-than-expected quarterly profit and setting aside more funds to cover losses on bad loans, but raised its dividend. Its stock rose 1.25 percent to 84.27 Canadian dollars (64.71 U.S. dollars) per share.

Among rival banks, Royal Bank of Canada added 0.93 percent to 79.25 Canadian dollars, and Toronto-Dominion Bank was up 0.67 percent to 57.38 Canadian dollars.

Among energy issues, Athabasca Oil Corporation gained 6.67 percent to 1.44 Canadian dollars, and Canadian Natural Resources advanced 2.07 percent to 38.91 Canadian dollars.

The gold-mining sector rebounded after a sharp fall in the previous session. Barrick Gold Corp increased 1.17 percent to 22.50 Canadian dollars.

International oil prices rallied Wednesday as official data showed a larger-than-expected drop in crude stocks.

The West Texas Intermediate for July delivery added 0.94 U.S. dollar to settle at 49.56 dollars a barrel, while Brent crude for July delivery increased 1.13 dollars to close at 49.74 dollars a barrel.

The Canadian dollar traded higher at 0.7679 U.S. dollar, compared with Tuesday's closing rate of 0.7607 U.S. dollar. Endit