Source: The Canadian Press

The Toronto stock market registered a solid gain Thursday after China reassured markets that it had no plan to sell eurozone bonds, but the TSX was somewhat hobbled by financials after a trio of big banks turned in earnings disappointments.

The S&P/TSX composite index jumped 205.22 points to 11,749.12 after China denied a Financial Times report Wednesday that it was reviewing its European investments, which sparked a late-day selloff on North American markets.

China’s State Administration of Foreign Exchange, which rarely comments on its activities, said talk of a review was “groundless” and stressed that the European market “in the past, present and future always will be one of (its) the major investment markets.”

Such a move to get out of eurozone debt would have signalled China’s lack of confidence that Europe can contain a government debt crisis that has depressed markets for weeks and taken big chunks from resource stocks, which make up a large part of the TSX.

“It shows that everyone is very nervous and that this is an emotion-driven market right now,” said Kate Warne, Canadian market specialist at Edward Jones in St. Louis, adding that investors are not focused on corporate news and improving economic fundamentals.

“I think it communicates clearly that we shouldn’t be paying a lot of attention to the intraday and, honestly, the day-to-day changes, because right now what we’re seeing is a lot of emotion and very little reality.”

The Chinese agency’s announcement Thursday also had a positive effect on the Canadian dollar, which was up 1.66 cents at 95.24 cents US.

The financial sector was the only negative one, if ever so slightly, on the TSX after Royal Bank of Canada (TSX:RY), Toronto-Dominion (TSX:TD) and CIBC (TSX:CM) all reported dramatically improved profits but fell short of analyst estimates on key metrics.

The Royal Bank of Canada (TSX:RY) handed in a $1.3-billion profit in its second quarter, much better than the $50-million loss it reported a year ago, but below analyst estimates. Net earnings amounted to 88 cents per share and cash EPS was 96 cents per share, well below the $1.08 that analysts had expected. RBC shares fell $2.62 to $56.85 .

CIBC (TSX:CM) had $660 million in net income for its fiscal second quarter. That compared with a $51-million loss reported by the bank in the comparable period last year. Excluding certain items, the company earned $1.46 per share, compared with analysts’ average estimate of $1.50 per share. CIBC shares shed $3.27 to $72.02.

TD Bank Financial Group (TSX:TD) more than doubled its second-quarter profit. Net income was nearly $1.2 billion, before adjustments, up from $545 million a year earlier. Excluding one-time items, the bank said adjusted income came in at $1.36 a share, two cents below analyst expectations. However, provisions for credit losses fell to $365 million in the quarter from $772 million a year earlier and capital markets revenue came in above some analyst expectations. TD shares added 58 cents to $73.38.

National Bank (TSX:NA) was also scheduled to report quarterly earnings Thursday after the close and its shares dipped 94 cents to $58.07.

The financial sector had taken on a more positive tone on Wednesday after Bank of Montreal (TSX:BMO) beat earnings expectations as their profit doubled from a year ago to $745 million. BMO shares were up again Thursday, rising $2.04 to $62.30.

The TSX found wide support from oil and mining stocks as most commodity prices rose sharply following the reassuring comments from China.

The TSX energy sector was ahead 4.2% as the July crude contract on the New York Mercantile Exchange rose $3.04 to US$74.55 a barrel. Suncor Energy (TSX:SU) gained $1.68 to C$32.37, while Imperial Oil (TSX:IMO) was up $1.44 at C$40.89.

The base metals sector rose almost 6% as the July copper contract on the Nymex rose eight cents to US$3.16 a pound. Teck Resources (TSX:TCK.B) was up $2.27 to C$36.79 while HudBay Minerals (TSX:HBM) rose 86 cents to $12.18.

The gold sector was higher even as June bullion in New York faded $1.50 to US$1,211.90 an ounce. Kinross Gold Corp. (TSX:K) rose 18 cents to C$18.20.

The TSX Venture Exchange gained 34.36 points to 1,504.04.

New York markets surged as investors looked beyond disappointing reports on initial jobless claims and gross domestic product.

New York’s Dow Jones industrial average surged 284.54 points to 10,258.99, the Nasdaq composite index gained 81.8 points to 2,277.68 and the S&P 500 index moved ahead 35.11 points to 1,103.06.

The U.S. Labour Department said initial claims for unemployment benefits fell to a seasonally adjusted total of 460,000 last week. That’s short of the drop to 455,000 that economists polled by Thomson Reuters had forecast.

A separate report said the U.S. economy grew at an annual rate of 3% in the first three months of the year, worse than an initial government estimate of 3.2% growth. The revised figure was also worse than the updated forecasts by economists, who had predicted it would rise 3.4%.

In other corporate news, Finance Minister Jim Flaherty said federal regulations will be tightened to ban Canadian banks from using their websites to promote insurance that can’t be sold through their regular branch offices.

Shares in Canadian insurers were sharply higher, with Sun Life (TSX:SLF) ahead $1.63 at $29.88, while Manulife Financial gained $1.10 to $17.69.

Shares in Viterra Inc. (TSX:VT) climbed six cents to $7.70 after the agricultural products company agreed to buy 21st Century Grain Processing, a U.S.-based processor of oats, wheat and custom-coated grains, for US$90.5 million in cash.