TSX up 1.5% for The month

Canada’s benchmark stock index dropped for the day on Wednesday, but posted a 1.5% gain for the month of February as the global economic outlook seemed to improve.

The S&P/TSX composite index closed the day and month at 12,644.01, a drop of 96.46 points, or 0.76%. Five of the 10 subindexes declined, led by materials, down 2.75% as gold issues declined, and industrials, which dropped 0.91% due to embattled engineering giant Snc-lavalin. The company, which saw its share price drop 20.55% on Tuesday after it issued a warning about a drop in earnings, fell a further 2.68% on Wednesday to $37.40.

The price of crude oil rebounded from its earlier losses to close at US$107.07 a barrel, a gain of US52¢ on the day, while gold slid for a third session, losing US$77.10 to US$1,711.30 an ounce.

The European Central Bank announced 530 billion euros ($710 billion Cdn) in cheap loans, ensuring eurozone banks have plenty on hand for lending and increasing the appetite for risk, which was reflected in gains made by the Canadian dollar on Wednesday. The loonie closed the day at US$1.0106, a gain of 60 basis points.

The move by the ECB, combined with upwardly revised U.S. fourth-quarter gross domestic product figures, gave markets some early upward momentum, but U.S. Federal Reserve chief Ben Bernanke put on the brakes with comments to Congress on Wednesday. He noted that despite the recent improvements in the U.S. economy, things would have to get a lot better still in order for the country’s unemployment rate to drop any further.

“... Bernanke recognized the improved economic and employment conditions. He also indicated that 2% remains an appropriate goal for the inflation rate (this is similar to other major central banks and is in line with the centre of the 1-to-3% range that the Bank of Canada has been used for nearly 20 years now),” said market analyst Colin Cieszynski in an note, but he did not set a goal for the unemployment rate.

“The street appears to have taken this as meaning that in the coming years the Fed may start to favour price stability over employment growth. This represents a major shift from the stand of recent years of putting the monetary pedal to the metal to get the economy moving. The street clearly took this to suggest that there’s no (third round of quantitative easing) coming any time soon.”

The Dow Jones industrial average fell 53.05 points, or 0.41%, to 12,952.07, and the Nasdaq composite index, which rose above 3,000 for the first time since December 2000 in morning trading, fell 19.87 points, or 0.67%, to 2,966.89.

Canada’s junior Venture exchange fell 21.66 points, or 1.28%, to 1,671.53.