March 26, 2020 / 7:07 PM / 14 days ago

WRAPUP 2-TSX and Canadian dollar gain as economic aid encourages investors

 (Updates prices)
    * TSX gains 1.8% as Ottawa boosts stimulus
    * Canadian dollar rises 1% against the greenback
    * Loonie touches its strongest since March 17 at 1.4010
    * Canadian bond yields fall across the curve

    By Fergal Smith
    TORONTO, March 26 (Reuters) - Canada's main stock market
rallied for a third straight day and the loonie rose to a
nine-day high on Thursday as Ottawa tripled the size of a
mortgage securities buying program, with investors becoming more
impressed with the amount of economic aid.
    Canada said it was ready to buy C$150 billion of mortgage
securities, up from C$50 billion announced earlier this month,
to expand funding for lenders dealing with tighter credit
markets due to the economic impact of the coronavirus outbreak.
            
    On Wednesday, Canada almost doubled the value of an aid
package to C$52 billion to help people and businesses deal with
losses from the outbreak, while the Bank of Canada has cut its
key interest rate by a total of 100 basis points this month to
0.75%.             
    Some economists expect the central bank to cut rates to zero
and begin purchasing in large scale assets such as government
bonds.        
    "Fear over how long coronavirus containment measures could
last are starting to be offset by encouragement that fiscal and
monetary support measures are underway to support Canadians and
Canadian companies," said Colin Cieszynski, chief market
strategist at SIA Wealth Management.
    The Toronto Stock Exchange's S&P/TSX composite index
          ended up 1.8% at 13,371.17, its highest closing level
since March 13. The index has rebounded nearly 20% from Monday's
8-year low.
    The heavily-weighted financials group rallied 1.7%, while
industrials were up 3.3%.
    Wall Street also rallied as record weekly unemployment
benefit claims added to the case for more stimulus to combat the
economic impact of the coronavirus pandemic, while the U.S.
dollar        fell for a fourth straight day against a basket of
major currencies.             
    The Canadian dollar          was trading 1% higher at 1.4056
to the greenback, or 71.14 U.S. cents. The currency, which on
Wednesday notched its biggest gain in four years, touched its
strongest intraday level since March 17 at 1.4010.
    The price of oil, one of Canada's major exports,       
settled 7.7% lower at $22.60 a barrel as restrictions on travel
worldwide slashed fuel demand and the United States scrapped
plans to buy domestic oil for its emergency reserve.
            
    Canadian government bond yields fell across the curve in
sympathy with U.S. Treasuries. The 10-year             was down
5.2 basis points at 0.850%.

 (Reporting by Fergal Smith; editing by Nick Zieminski and
Alistair Bell)
  
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