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Canadian stocks ended the week on a positive note, boosted by a speech from Federal Reserve Chairman Ben Bernanke that kept stimulus hopes alive and as the soaring price of bullion helped gold miners.
Bernanke stopped short of giving a clear signal the U.S. central bank would soon act but investors bet that his language made another round of bond-buying, known as quantitative easing, more likely.
"QE is arguably very good for risk assets like equities, but also QE would have a not terribly indirect impact on commodities," said Stephen Wood, chief investment strategist at Russell Investments in New York.
Bullion hit a five-month high after the speech, helping Toronto-listed gold miners punch higher.
Major players Barrick Gold Corp. (ABX-T) and Goldcorp Inc. (G-T) each gained more than 3 percent, Yamana Gold Inc. (YRI-T) jumped 4.3 percent and a slew of juniors jumped even more.
Oil and copper prices also rose, lending support to the energy and materials companies that make up a large portion of the Canadian exchange.
Athabasca Oil Corp. (ATH-T) jumped 8.6 percent to $13.58 after a newspaper reported Kuwait's state-controlled oil company had agreed to invest $4 billion in a joint venture in the northern Alberta oil sands.
The Toronto Stock Exchange's S&P/TSX composite index (TSX-I) gained 62.61 points, or 0.53 percent, to close at 11,949.26. The index still notched a loss on the week but gained 2.44 percent over the course of August in very thin volumes.
Telus (T-T) slipped 2.5 percent as the telecom company sought to block its largest investor from holding a shareholder meeting over a share consolidation plan.
BERNANKE AND EUROPE
The index had initially plummeted into the red as Bernanke did not explicitly point to imminent monetary easing, but quickly changed course again as the message was digested.
"Markets are very easily moved up and down," said Sal Masionis, a stockbroker at Brant Securities in Toronto. "You've really got to parse every little thing he says."
In the speech at a meeting of central bankers in Jackson Hole, Wyoming, Bernanke said progress in bringing down U.S. unemployment was too slow and the Fed would act as needed to strengthen the economic recovery.
"The speech comes across as a staunch defense of the effectiveness of unconventional monetary policy," Paul Dales, a senior economist at Capital Economics, wrote in a note.
He said the Fed would likely announce a third round of asset purchases at a mid-September meeting.
Such a move is seen as a positive in Canada, which watches its southern neighbor and main trading partner closely for signs of economic recovery.
"The U.S. continues to be the only safe haven in this weakening global economy. The data keeps improving and showing strong signals," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
With the Fed chairman's speech in the rear-view mirror, the market will watch whether the European Central Bank announces a clear plan to tackle the euro zone debt crisis at its policy meeting next week.
"Draghi's not at Jackson Hole," Russell's Wood said, referring to ECB President Mario Draghi's absence from the meeting of global central bankers. "If he's too busy creating the skeleton, if not the structure, of a pan-European banking union ... the markets would look at that as a significant step forward."
Friday's rise was led by gold miners and by Royal Bank of Canada (RY-T), which rose 0.9 percent after surprising investors with a dividend increase and solid profit growth on Thursday.
Domestically, growth in the Canadian economy positively surprised investors at an annualized 1.8 percent in the second quarter as strong business investment overshadowed a small fiscal drag, data released on Friday showed.