CANADA STOCKS-TSX up as U.S. debt deal nears; tempered by resources, SNC

Reuters

* TSX up 8.75 points, or 0.7 percent at 12,940.21

* Energy and financials led 7 of 10 main groups higher

* Materials and industrials dragged lower by gold miners,

SNC-Lavalin

By Alastair Sharp

TORONTO, Oct 16 (Reuters) - Canada's main stock index ended

higher on Wednesday as a political deal to avert a U.S. default

neared completion, but gains were capped by weak materials

stocks and a sharply lower earnings revision by SNC-Lavalin

Group Inc.

The TSX tracked larger gains in U.S. equity markets,

which rose on optimism that a fiscal deal that would prevent

Canada's biggest trade partner defaulting on its debt could be

wrangled between Washington lawmakers at the eleventh-hour.

North American equities are likely to keep fluctuating on

each twist and turn of the debt saga, and then resume their

focus on the data that will inform the Federal Reserve's

decision on when to pull back its monetary stimulus, said

Michael Sprung, president at Sprung Investment Management Inc.

"Until we see something towards a more sustainable course

for the U.S. fiscal situation I don't think we're going to be

out of the woods for a while," he said.

"Today it's the fiscal concerns and tomorrow it'll be the

next economic release, whether it be employment or manufacturing

or house prices or whatever."

The Toronto Stock Exchange's S&P/TSX composite index

closed the session up 25.75 points, or 0.2 percent, at

12,957.21. Nine of the index's 10 main groups ended in positive

territory. Wall Street stocks jumped more than 1 percent.

"The U.S. market is popping up on the upside, so I guess

they're optimistic, and it'll eventually drag us up," said Paul

Hand, managing director at RBC Capital Markets.

The heavily weighted financials and energy groups were up

0.3 percent and 0.6 percent respectively.

Brent crude oil prices rose above $110 a barrel, while U.S.

crude rose to $101.72 per barrel on U.S. budget hopes. Meg

Energy Corp rose 2.7 percent to C$35.24, while Encana

Corp gained 0.7 percent to trade at C$18.43.

Tempering advances was a 1.2 percent drop in materials

stocks. Gold miners in particular retreated, with Agnico Eagle

Mines Inc off 3.5 percent at C$24.85 and Goldcorp Inc

off 2.2 percent at C$24.41.

Bullion prices retreated as investors moved away from the

safe-haven metal amid prospects of a last-minute U.S. debt deal.

Still RBC's Hand said bullion prices have been very volatile

of late. "Gold is becoming very hard to prognosticate," he said.

SNC-Lavalin shares took a 4.5 percent hit to

C$42.13 after the Canadian engineering and construction firm

said it was slashing its fiscal 2013 outlook. The overall

industrials group was off 0.1 percent.

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