TSX rebounds from 2-month low as bond yields tumble

FILE PHOTO: A sign board displaying Toronto Stock Exchange stock information is seen in Toronto

By Fergal Smith

(Reuters) -Canada's main stock index rallied on Wednesday, led by mining and technology shares, as a sharp pullback in bond yields from recent multi-year highs bolstered investor sentiment.

The Toronto Stock Exchange's S&P/TSX composite index ended up 188.58 points, or nearly 1%, at 19,879.79, after posting on Tuesday its lowest closing level since June 26.

"I think it was a relief rally because yields are lower and bonds are higher and that's been the pressure point over the last month or so," said Angelo Kourkafas, senior investment strategist at Edward Jones.

Canada's 10-year yield tumbled 16.8 basis points to 3.647%, tracking moves in U.S. Treasuries, after weak U.S. and European business activity suggest global disinflation. Markets await possible indications of where the Federal Reserve sees interest rates ahead of its annual summit at Jackson Hole, Wyoming.

The data "potentially suggests that all these rate hikes are starting to filter through the economy," Kourkafas said. "It's a case of bad news is good news, this type of reaction today."

The technology sector rose 2.7%, while the materials sector, which houses miners and fertilizer companies, added 1.8% as gold and copper prices climbed.

Heavily-weighted financials advanced 1%, with the sector clawing back some recent declines ahead of the release of quarterly earnings reports by Canada's big banks.

Royal Bank of Canada and Toronto-Dominion Bank will kick off the earning season on Thursday.

(Reporting by Fergal Smith in Toronto and Siddarth S in Bengaluru, Editing by Tasim Zahid and Alistair Bell)