By Wojtek Dabrowski
Reuters
Friday, June 23, 2006

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TORONTO (Reuters) - A pair of big energy mergers south of the border helped the Toronto Stock Exchange's main index to a gain of almost 120 points on Friday as the market bet the U.S. deals could reignite consolidation among Canada's oil and gas producers.

Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, “I'm not expecting huge rallies from where we are. If we get them, it’ll be a bonus.”

The S&P/TSX composite index closed 118.81 points, or 1.07 percent, higher at 11,249.02, also helped by a healthy performance from gold-mining shares. The day was another precious session of positive territory for Toronto stocks, which in recent weeks had given up all gains they had made this year in a commodities-driven correction.

The composite's heavyweight energy group rose 2.73 percent, fueled in part by news that Texas-based Anadarko Petroleum Corp. has agreed to buy Kerr-McGee Corp. and Western Gas Resources Inc. in deals totaling more than $21 billion.

"It's nice to see that we are ending the week on a much better note that we began it," said Elvis Picardo, chief market strategist at Global Securities Corp.

"The deal south of the border has fueled speculation that there may be some consolidation activity on the Canadian side as well, which is why you're seeing renewed interest in the big natural-gas producers, like EnCana."

EnCana Corp. shot up C$1.46, to C$56.35. Nexen Inc. gained C$3.01, or 5.3 percent, to C$59.35, and Suncor Energy Inc. picked up C$2.54 to C$82.54.

All other main groups in the composite rose with the exception of the financials, which slipped 0.37 percent. The S&P/TSX 60 index of Canadian blue chips rose 5.47 points to 633.04.

The other buttress of the Toronto composite, the resource-laden materials group, was up 1.45 percent.

But despite the broad lift in Canadian equities, not all analysts saw clear sailing ahead.

"The market is a character unto its own, that's for sure -- we're seeing the sideways stuff, you know, up one day and down the next," said Adrian Mastracci, president at KCM Wealth Management Inc. "I'm not expecting huge rallies from where we are. If we get them, it'll be a bonus."

Gold futures in New York recorded modest gains on Friday, with bullion for August delivery rising $2.60 to settle at $588 an ounce on the New York Mercantile Exchange's COMEX division.

This in turn helped Canada's gold producers, including Glamis Gold Ltd., which finished up C$1.60, or 4.2 percent, at C$39.80, and Agnico-Eagle Mines Ltd., which gained C$1.30 to C$34.72.

"Gold prices seemed to have bottomed out earlier this week, so we are seeing active investor interest in a number of gold stocks as well," Picardo said. "Most of this buying seems to be bargain-hunting because a number of stocks are down, 25, 30 percent since the correction began."

In the United States, investors' glee over the Anadarko deals was later overshadowed by interest rate concerns ahead of the Federal Reserve's policy meeting next week.

The Dow Jones industrial average finished down 30.02 points, or 0.27 percent, at 10,989.09. The S&P 500 index slid 1.10 points to 1,244.50, while the tech-loaded Nasdaq composite gave up 1.51 points to 2121.47.

($1=$1.12 Canadian)

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