Source: The Canadian Press

The Toronto stock market closed higher Monday as strong economic data from China and the passage of new global banking regulations boosted the base metals and financial sectors.

The S&P/TSX composite index gained 52.77 points to 12,149.86. The TSX Venture Exchange added 9.07 points to 1,605.57.

Confidence in financial institutions worldwide improved after regulators agreed on the weekend to reforms that could help avert another credit crisis, including a requirement that banks increase reserves to protect against potential losses.

The main relief in the markets over the conclusion of the so-called Basel III negotiations is that the proposals for new bank rules appear to be less burdensome than many had feared, and they give institutions until 2019 to fully comply. Canada’s financial institutions already have strong reserves and it is expected the new requirements will have little impact here.

Toronto’s financial sector was up 1.3%. Shares in Royal Bank of Canada (TSX:RY) added $1.10 or 2.1% to $54.60.

“The Basel III requirements aren’t as onerous and the time given to meet the requirements is longer than expected, so the financials are clearly leading the rally,” said Kate Warne, Canadian market specialist at Edward Jones in St. Louis.


Meanwhile, the base metals sector soared 4.5% as fresh signs of strong economic expansion in China raised demand prospects for everything from copper to aluminum.

China’s industrial output, fixed-asset investment and retail sales all showed higher than expected growth in August, according to government data released on the weekend. Buying sentiment was also rekindled because the central bank didn’t raise interest rates even after inflation hit its highest level in a year last month.

“People have been watching China with concern about how much the economy slowed, and with the industrial production data from August coming in stronger than expected, I think that’s a second piece of relief that’s helped the markets move higher,” Warne added.

Demand for commodities also received a boost after the European Commission said the economy across the EU is recovering faster than expected and will likely grow by 1.8% this year — three-quarters of a percentage point higher than its previous forecast.

The December copper contract on the New York Mercantile Exchange gained 7.25 cents to US$3.48 a pound. Shares in HudBay Minerals Inc. (TSX:HBM) gained 79 cents or 5.3% to C$15.75.

The October crude contract gained 74 cents to US$77.19 a barrel after the closure of a Chicago-area pipeline following a leak continued to raise supply concerns.

The operator of the pipeline, Enbridge Inc. (TSX:ENB) subsidiary Enbridge Energy Partners, said almost all of the spilled crude has been cleaned up but the pipeline remains shut down. The mishap followed a leak in an Enbridge pipeline in Michigan earlier this summer.

The Toronto energy sector added 0.6%. Shares in Enbridge lost 62 cents to C$51.88.

The gold sector weighed on the TSX even as the December bullion contract edged up 60 cents to close at US$1,247.10 an ounce. Shares in Goldcorp Inc. (TSX:G) lost 26 cents to C$42.60.

The Canadian dollar added 0.73 of a cent to 97.34 cents US amid strong commodity prices.

On Wall Street, a round of corporate dealmaking gave a lift to stocks. The Dow Jones industrial average gained 81.36 points to 10,544.13. The Nasdaq composite index was up 43.23 points or nearly 2% at 2,285.71, while the S&P 500 added 12.35 points to 1,121.90.

Hewlett-Packard Co. (NYSE:HPQ) said it will purchase security software provider ArcSight Inc. (Nasdaq:ARST), and Dollar Thrifty Automotive Group Inc. (NYSE:DTG) said it had accepted Hertz Global Holdings Inc.’s (NYSE:HTZ) acquisition offer.

In Canadian corporate news, energy company Athabasca Oil Sands Corp. (TSX:ATH) has signed a deal to acquire Excelsior Energy Ltd. (TSXV:ELE) for approximately C$144 million. Athabasca’s shares gained 57 cents or 5.7% to $10.52. Excelsior shares added one cent to 37 cents.

Magna International Inc. (TSX:MG) said co-CEO Siegfried Wolf will leave the auto parts giant in November to join Basic Element, the parent company of Russian automaker Gaz Group. Magna’s shares fell 91 cents to $80.94.

Shares in junior miner Centamin Egypt Ltd. (TSX:CEE) tumbled 30 cents, or 10.4%, to $2.59 after the company revised its 2010 production estimate downwards by about 20%.

And global mining giant Rio Tinto (NYSE:RTP) said it has increased its ownership in Ivanhoe Mines (TSX:IVN) to 34.9% after the conversion of a credit facility into shares. Shares in Ivanhoe added 62 cents or 3.3% to $19.27.