06/27/2011 05:13 EDT | Updated 08/27/2011 05:12 EDT

Toronto Stock Exchange Close Reflects Greek Austerity Bill Optimism

THE CANADIAN PRESS -- TORONTO - The Toronto Stock Exchange closed higher Monday after a day of light trading as investors were cautiously optimistic that Greece would pass an austerity bill necessary to prevent default on the country's debt.

The S&P/TSX composite index gained 57.6 points to 12,966.5 with only the gold index in the red. The TSX Venture Exchange lost 37.6 points to 1,867.7.

The Canadian dollar added 0.03 cents to close at 101.35 cents US amid hopes for an easing of the Greek debt crisis after French President Nicolas Sarkozy said his country's banks would accept a debt rollover to help Athens.

That would give Greece more time to meet its other immediate financial obligations. French bondholders hold about US$21.3 billion in Greek government debt.

The plan comes ahead of Wednesday's vote by the Greek parliament on planned austerity measures. Greece needs the measures to pass in order to get its next instalment of funding from last year's euro110-billion bailout package. Many observers expect the measures will pass and that Greece will avoid a default.

If Greece defaulted, the fear is that investors would lose faith in the financial strength of other countries that have borrowed heavily or hold billions in Greek debt.

"The market is pretty fixated on what is going on in Europe," said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd.

"(The positive turn) is a signal that people expect the vote to pass. If people were really nervous about that, then we would definitely be seeing the opposite behaviour."

Watson said it appeared that investors believe the bill will pass, which could buoy the market this week. But he doesn't expect any relief rally to set a positive tone for markets in the long term, as the Greek bill would only be a short-term solution to European sovereign debt problems.

"It's yet another Band-Aid on the problem, yet it doesn't solve the problem. It's like that wound that never heals."

The influential financial sector, up 0.7 per cent, helped buoy the market on the Greek news and amid an announcement that global financial regulators plan to increase the capitalization requirements for leading lenders. Shares in Toronto-Dominion Bank (TSX:TD) added 1.16 per cent, or 91 cents, to $79.60.

Market heavyweight Potash Corp. of Saskatchewan Inc. (TSX: POT) added three per cent, or $1.61, to $53.52.

Oil fell 55 cents to US$90.61 a barrel on the New York Mercantile Exchange as concerns about the Greek debt crisis waned. Earlier, crude had dipped below US$90 on fears that the Greek debt crisis would not be resolved.

The energy sector was up 0.05 per cent with shares in Canadian Natural Resources (TSX:CNQ) up four cents at C$38.30.

Gold prices fell $4.50 to US$1,496.40 an ounce, while copper lost five cents to US$4.05 a pound. Goldcorp Inc. (TSX:G) was down 11 cents at C$46.13.

In corporate news, shares in Yellow Media Inc. fell 18.4 per cent, or 55 cents, to $2.44 after two firms slashed their price targets for the company as it struggles with debt and the transition from print to digital.

Bear Creek Mining (TSXV:BCM) shares fell 27 per cent, or $1.41, to $3.75 after it said the Peruvian government had revoked the Canadian miner's licence to open its Santa Ana silver mine. Bear Creek's CEO described the government decree Monday as "illegal and unconstitutional" and said the company was considering its legal options but will seek a political solution.

Taiga Building Products Ltd. (TSX:TBL) shares were down 23.5 per cent, or 19 cents, to 62 cents after announcing on the weekend that it had suspended its dividend after reporting a fourth-quarter net loss and lower annual profits.

Shares in Global Railway Industries (TSX:GBI) added 20.8 per cent, or 31 cents, to $1.80 apiece after a subsidiary won a $120-million contract to refurbish 127 GO Transit railway coaches.

Air Canada's (TSX:AC.B) stock added two cents to $2.31 per share. The company's customer service and airport workers voted in favour of a new collective agreement reached under the threat of back-to-work legislation. In other Air Canada news, Canada's Competition commissioner said she is seeking to block a joint venture between Air Canada and United Continental over concerns that a monopoly on some cross-border routes would hurt consumers.

Shares in TMX Group Inc. (TSX:X), owner of the Toronto Stock Exchange, fell 2.9 per cent or $1.31 to $43.89 after a number of top Canadian executives backed its merger with the London Stock Exchange Group over a rival bid by a group of Canadian banks and pension funds. The rival bidders continued their public war of words and attempts to woo shareholders ahead of a crucial shareholder vote on the merger Thursday.

Niko Resources Ltd. (TSX:NKO), which admitted last week to bribing a Bangladeshi official and is being investigated by two law firms known for class action suits, saw its shares drop 2.9 per cent or $1.81 to $61.04.

Car parts maker Automodular Corp. (TSX:AM) said Monday that it had won a multi-year contract extension from Ford (NYSE:F) covering its operations in Oakville, Ont.. The company's shares rose 20 per cent, or 21 cents, to $1.25 apiece.

Shareholder advisory firm ISS is recommending shareholders of Research In Motion Ltd. (TSX:RIM) vote to support a motion to split the jobs of chief executive and board chairman at the BlackBerry maker. Its shares fell 1.5 per cent, or 41 cents, to $27.82.

U.S. markets moved up despite May data that showed Americans spent at the weakest pace in 20 months.

The Dow Jones industrial average was up 109 points to 12,043.6, while the Nasdaq gained 35.4 points to 2,688 and the S&P was up 11.7 points to 1,280.

Consumer spending was unchanged in May, the U.S. Commerce Department said Monday. That was the worst result since September 2009. And when adjusted for inflation, spending actually dropped 0.1 per cent.

Incomes rose 0.3 per cent for the second straight month. But adjusted for inflation, after-tax incomes increased only 0.1 per cent in May, after falling by the same amount in the previous month.

Nike Inc. (NAS: NIKE) announced after markets closed that its earnings per share were $1.24 in the fourth quarter, beating analysts estimates of $1.17 per share.