By Jonathan Spicer
Reuters
Monday, November 6, 2006

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TORONTO (Reuters) - The Toronto Stock Exchange's main index logged a third session of strong gains on Monday as merger activity and higher oil prices helped to negate the previous week's meltdown.

Adrian Mastracci, fee-only portfolio manager at Vancouver’s KCM Wealth Management, says, "I still think the markets may be a little over-heated right now but I'm happy with the upside, especially after last week's announcement that rattled investors and the market."

The S&P/TSX composite index closed up 94.24 points, or 0.8 percent, at 12,333.28. Overall, eight of the TSX index's 10 main groups were higher, led by oil and gas producers, up 1.6 percent.

The TSX has advanced 282.89 points, or 2.3 percent, in the past three sessions, wiping out the steep losses caused by last week's shock announcement that Ottawa would start taxing the popular income trust sector.

"I still think the markets may be a little over-heated right now but I'm happy with the upside, especially after last week's announcement that rattled investors and the market," said Adrian Mastracci, investment counsel and president at KCM Wealth Management Inc. in Vancouver.

Energy producers added much of the muscle to the index, which is now within 162 points of its record high, as U.S. December crude futures climbed 88 cents to settle at $60.02.

EnCana Corp. topped the weighted gainers, up C$1.17, or 2.2 percent, at C$55.42. The oil and gas independent's CEO said the company had considered forming an income trust worth at least C$20 billion before Ottawa's announcement last week.

Trusts continued a cautious rebound on Monday, with the S&P/TSX income trust subindex gaining another 2.1 percent after dropping more than 12 percent last week. Canadian Oil Sands Trust was up C$1.77, or 6.3 percent, at C$30.05.

Four Seasons Hotels Inc. stock went skyward after Saudi Prince Alwaleed bin Talal and an investment firm owned by Microsoft Corp. Chairman Bill Gates launched an offer that values the company at $3.7 billion.

Shares of Four Seasons surged C$20.95, or 29 percent, to C$93.06 in Toronto, topping the net gainers list. In New York, the stock was up $18.63, or 29.2 percent, at $82.50, above the cash bid price of $82 a share. The offer is not expected to draw counterbids.

Elsewhere, Kinross Gold Corp. shares slipped as the world's eighth-largest gold miner made a friendly takeover bid for Bema Gold Corp. worth $3.1 billion.

As bullion prices eased from a two-month high, Kinross stock sank C$1.46, or 9.7 percent, to C$13.53, while Bema stock rose 57 Canadian cents, or 10.6 percent, to C$5.97.

In the telecoms group, which slipped 0.1 percent, Manitoba Telecom Services Inc. was off C$1.19, or 2.6 percent, at C$44.30 as it reported a lower third-quarter profit.

"People are feeling better now that they've seen the earnings come out for the third quarter -- and they weren't ugly," said Mastracci.

"There is some rejoicing, but with signs of a slowdown along the road ... the data suggests a cooling, sluggish economy."

Since September, the TSX has gained 4.9 percent and finished higher in 16 of 25 sessions.

Market volume on Monday was a healthy 457 million shares worth C$6.4 billion. Advancers outpaced decliners 999 to 590. The blue chip S&P/TSX 60 index closed 4.07 points higher, or 0.6 percent, at 710.00.

South of the border, a flurry of corporate takeovers boosted the Dow and the S&P 500 to their biggest one-day gains in a month.

The Dow Jones industrial average rose 119.51 points, or 1 percent, to close at 12,105.55. The Standard & Poor's 500 gained 15.48 points, or 1.13 percent, to finish at 1,379.78. And the Nasdaq composite index advanced 35.16 points, or 1.51 percent, to close at 2,365.95.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.