TSX rises on U.S. data, Tim Hortons as it awaits Fed

By John Tilak

TORONTO (Reuters) - Canadian stocks hit a one-week high on Tuesday as stronger U.S. economic data boosted oil and gas shares, while market focus was squarely on a U.S. Federal Reserve meeting that might offer clues on the future of U.S. monetary policy.

Also boosting Canada's benchmark stock index, coffee chain Tim Hortons Inc was up 3.5 percent on news that it now faces pressure to make changes from another investor, U.S. hedge fund Scout Capital Management, after recently outlining plans to address the concerns of activist investor Highfields Capital.

Sentiment was lifted further by data showing U.S. consumer prices rose in May and that a gauge of underlying price pressures indicated signs of stabilizing after a long decline.

Front of mind, however, was speculation on whether the Fed will shed light at the end of its two-day meeting on Wednesday on when it might begin dialing back its bond buying program.

"Even though the attention is on the Fed, I don't think the market is sold on the idea that tapering is coming really soon," said Gareth Watson, vice president, investment management and research, at Richardson GMP.

"The U.S. economy is still creating jobs, and the housing market appears to be getting better, but is it completely planted on its feet? I don't think the Fed is convinced of that yet."

The Toronto Stock Exchange's S&P/TSX composite index <.gsptse> was up 72.78 points, or 0.59 percent, at 12,361.68, after earlier touching 12,376.47, its highest level since June 10. Nine of the 10 main sectors on the index were higher.

Energy shares climbed more than 1 percent, benefiting from the U.S. data that pushed up oil prices. In the group, Suncor Energy Inc added 1.6 percent to C$31.75 and played an influential role in leading the index higher.

Financials, the index's most heavily weighted sector, gained 0.6 percent. Royal Bank of Canada , the country's biggest lender, rose 0.9 percent to C$60.97.

The jump in Tim Hortons, to C$55.75, helped the consumer discretionary group climb 1.4 percent.

"This is just a natural process where people are expecting that perhaps with this investor stepping in, changes (at Tim Hortons) could be afoot," Watson said. "There's no guarantee, it's no slam dunk at all that that happens, but certainly speculation picks up."

Shares of gold producers tumbled 2.1 percent after a decline in the price of bullion.

In a Reuters poll released on Tuesday, analysts predicted the resource-heavy Toronto stock index, which has struggled to gain traction in 2013, would kick into gear in the second half of the year as the global economy rebounds.

(Editing by Peter Galloway)

Source: http://news.yahoo.com/tsx-may-open-lower-commodities-drag-123514907.html

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