TSX rises as IMF plans To boost war chest

North American markets advanced on Wednesday, bolstered by reports that International Monetary Fund may boost its war chest to protect against any worsening of the eurozone debt crisis.

In Toronto, the benchmark S& P/ TSX composite index rose 94.69 points, or 0.77%, to 12,327.52. Nine of the 10 sub- indexes advanced, led by consumer goods, up 1.87%, and industrials, which rose 1.80%. The energy sector rose up 1.16% even after U. S. State Department announced it was denying a presidential permit for the construction of the Keystone XL pipeline.

Calgary- based Transcanada Corp., the company behind the pipeline, has been given the option of making a new application — potentially for an alternative route for Keystone XL that avoids environmentally sensitive areas in Nebraska. Transcanada Corp. dropped 1.11% to $ 41.89.

The price of crude oil slipped by US12¢ to US$ 100.59 a barrel on Wednesday, while gold erased its earlier losses and ended the day at US$ 1,659.90 an ounce, a gain of US$ 4.30.

The IMF is proposing raising its lending resources by as much as US$ 500- billion after identifying a potential need for as much as $ 1 trillion in the coming years.

“The IMF thing is a double- edged sword,” Paul Zemsky, the New York- based head of asset allocation for ING Investment Management, told Bloomberg. “On the one hand, it does manage the tail risks, safeguard the economy. On the other hand, you wonder: What do they know that I don’t know?”

There was also some good news out of the U. S. on Wednesday, beginning with reports that U. S. industrial production rose 0.4%, just missing analysts’ estimates of an increase of 0.5%, while other reports pointed to a turnaround in the housing market.

“The home builder housing market index jumped to a four- and- a- half- year high in January, signalling firmer housing starts and sales ahead. Though still depressed, the U. S. housing market is showing concrete signs of stabilizing,” write economist Sal Guatieri of BMO Capital Markets.

The Dow Jones industrial average rose 96.88 points, or 0.78%, to 12,578.95, while the Nasdaq composite rose 41.63 points, or 1.53%, to 2,769.71.

Canada’s junior Venture exchange rose 12.33 points, or 0.80%, to 1,550.05.

The Canadian dollar rose 39 basis points against the U. S. greenback on Wednesday, closing at US98.89¢, but fell against most other world currencies, particularly the euro, which rose after the news from the IMF eased concerns about eurozone debt.

Also working against the loonie was a falling oil price and Bank of Canada’s Monetary Policy Report which said record consumer debt will slow down economic recovery.