TSX Surges 172 points in broad- based rally

The Toronto Stock Market registered a solid advance Tuesday as resource stocks led a rebound across all sectors after a string of losses amid global economic uncertainty.

The S& P/ TSX composite index jumped 171.94 points to 11,507.71 while the TSX Venture Exchange gained 7.02 points to 1,285.57.

The Canadian dollar gained US0.16¢ to US96.34¢ as the Bank of Canada said that it was leaving its key interest rate unchanged at 1% because of a worsening economic environment. It also kept the door open for future rate hikes.

In its accompanying statement, Canada’s central bank said “to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”

Data showing greater expansion in the U. S. service sector helped lift markets.

New York’s Dow Jones industrial average was up 26.49 points to 12,127.95.

The Nasdaq composite index added 18.1 points to 2,778.11 and the S& P 500 index climbed 7.32 points to 1,285.5 as the Institute for Supply Management’s non- manufacturing index came in at 53.7, up from 53.5 in April.

The gain followed a slide of almost 2% last week as the European debt crisis spread to Spain’s banking sector.

Spain’s most stricken lender, Bankia SA, needs ¤ 19- billion in government aid, but Spain only has ¤ 5- billion left in a ¤ 19billion fund that it established in 2009 to help banks.

Those banks may force the country to seek a bailout. Spain, strapped for cash, might have to tap European Union rescue funds, but it is reluctant to do so because such aid would come with strict conditions.

Spain has been forced to pay ever higher amounts of interest to attract buyers for its debt with the yield on the country’s 10- year bond up 0.02 of a point to 6.42% before dipping back to 6.31%.

Spanish Treasury Minister Cristobal Montoro repeated Tuesday the country’s calls for the European Union to move faster towards establishing a banking union.

Meanwhile, finance ministers and central bank governors from seven of the world’s main economies were holding a conference call Tuesday to discuss Europe’s worsening debt crisis.

The energy sector was up almost 2.5% as oil oscillated between slight gains and losses during the session before the July crude contract on the New York Mercantile Exchange closed up US31¢ to US$ 84.29 a barrel. Suncor Energy Inc. was ahead US59¢ to $ 28.30 while Cenovus Energy Inc. advanced 36¢ to $ 30.88.