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At the open: Triple-digit gain for TSX, Italian stocks soar

FRANK GUNN/THE CANADIAN PRESS

North American markets opened with strong gains, as investors shrugged off worries related to U.S. politics and bet that stocks would continue their journey into higher territory in coming days.

In early trading, the S&P/TSX composite index was up 101 points, or 0.8 per cent, at 12,803. It was aided by a number of bullish factors: commodities were seeing gains, Research In Motion Ltd. shares were rising, and both Suncor Energy Inc. and Canadian Natural Resources Ltd. were benefiting from a favourable outlook for both energy firms in Barron's this weekend.

As equity markets opened, West Texas Intermediate oil was trading up 53 cents at $93.66 (U.S.) per barrel and gold was up $13.40 at $1,586 an ounce.

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In the U.S., the S&P 500 was up 7 points, or 0.4 per cent, at 1,522; and the Dow Jones industrial average was up 36 points, or 0.2 per cent, at 14,037.

Politics in both the U.S. and Italy are dominating market concerns this week. The deadline for averting the so-called U.S. sequester - huge spending cuts - is this Thursday night, but there are few signs the U.S. political parties will reach a compromise on limiting their impact in time. The cuts would be phased in, but many economists believe they could significantly slow the recovery in U.S. GDP growth this year.

Meanwhile, polls in Italy have just closed and results could have a significant impact on the euro zone's stock market. The vote, in many ways, is a referendum on the austerity and reform program of Prime Minister Mario Monti. Markets are hoping for a centre-left victory by Pier Luigi Bersani's Democratic Party in the lower house, with a Senate formed by Mr. Bersani teaming up with Mr. Monti. If Mr. Bersani fails to win the senate, he will have to launch coalition negotiations that could prove messy or even fail - uncertainty that markets won't like.

Exit polls this morning show Mr. Bersan taking some 34.5 per cent of the vote, compared with 29 per cent for a centre-right coalition led by former leader Silvio Berlusconi. That bit of encouragement has sparked a rally in Italian stocks, with the FTSE MIB - made up of the 40 most highly capitalized stocks in Italy - up 3.8 per cent.

Japan led gains in Asia overnight, posting gains of 2.4 per cent, as markets there cheered news of the expected nomination of Asian Development Bank President Haruhiko Kuroda as the next central bank governor. He's an advocate of aggressive monetary policy easing and the news sparked a further slide in the yen against the U.S. dollar to 33-month lows  - giving Japan's critical export sector an addition boost.

In other news out of Asia overnight, China's manufacturing growth hit four-month lows this month, with HSBC's preliminary purchasing managers' index coming in at 50.4, down from a final 52.3 in January. With the reading above 50, however, it still represented growth. Chinese stocks rose half a percentage point overnight.

Here's a closer look at some key stocks on the move this morning:

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Shares of Suncor Energy Inc. and Canadian Natural Resources Ltd. are on the rise today after the latest issue of Barron's said the two companies could gain more than 25 per cent in the next year, aided by valuable asset bases that may attract activist investors. Suncor shares are up about 1 per cent and Canadian Natural Resources is up 1.4 per cent.

Shares in Research In Motion Ltd. are up nearly 2 per cent. An interview with CEO Thorstein Heins was published over the weekend in a German newspaper in which he indicated the company has ramped up production of the new BlackBerry 10 devices as sales exceeded internal forecasts.

The Wall Street Journal reported that Barnes & Noble Inc. chairman Leonard Riggio is considering a bid for the company's bookstore business. The stock is up about 9 per cent at the open.

Home improvement retailer Lowe's Cos. said that cleanup efforts after Superstorm Sandy and its new pricing strategy helped its fourth-quarter net income surpass expectations. But shares are down 0.2 per cent at the open.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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