TORONTO — North American stock markets rallied Friday to close a week of losses with big gains, propelled by a more than 12 per cent jump in crude oil prices.
The March contract for crude oil shot up US$3.23 a barrel to US$29.44. Toronto Stock Exchange's S&P/TSX composite index was up 293.87 points or 2.4 per cent at 12,381.24.
In New York, the Dow Jones industrial average closed up 313.66 points at 15,973.84, while the broader S&P 500 advanced 35.7 points to 1,864.78 and the Nasdaq gained 70.67 points to 4,337.51.
The increase in oil prices also helped the commodity-sensitive loonie, which added 0.31 of a US cent to 72.14 cents US.
Federal Reserve chairwoman Janet Yellen's recent remarks that some global growth appears weaker than initially anticipated also boosted the loonie, said Stephen Carlin, head of equities for CIBC Asset Management. It signals the Fed may not move interest rates as quickly as previously thought.
Friday's rebound was also partly due to a recent easing of concerns over the liquidity measures that might exist in some European banks, specifically Germany's Deutsche Bank, he said.
The bank offered to buy back more than $5 billion worth of its own bonds Friday in a show of financial strength. Investors sold off the bank's stock after it reported a yearly loss of 6.8 billion euros in late January. The slide continued after concerns arose about whether the bank could make payments on complex financial instruments due April 30.
Carlin partly attributes to strength in oil prices to recent dividend cuts by a number of energy companies, comforting investors that they are starting to better align operating costs and cash flows with the current price environment.
Carlin also pointed to rumours that OPEC is prepared to discuss a co-ordinated supply cut as helping the day's oil rally. Earlier in February, rumours that OPEC and Russia would co-ordinate a supply cut helped fuel higher crude oil prices.
However, as low prices continue to place considerable strain on North American oil companies, many continue to make capital expenditure cuts. By the end of this year, that should result in an improved balance between supply and demand, Carlin said.
Elsewhere in commodities, the March contract for natural gas slipped 2.8 cents to US$1.966 per mmBtu.
However, gold bullion, which has enjoyed a big run-up in recent days amid a general flight to safety, saw the April contract give back $8.40 to US$1,239.40 a troy ounce.
Markets in China and Taiwan, which have been closed all week for the Lunar New Year holidays, reopen Monday. However, American markets will be closed Monday for Presidents' Day, while the TSX is closed for Family Day.
— With files from The Associated Press
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