TORONTO (Reuters) - Canada's main stock index closed higher on Thursday, rebounding from initial losses on news that First Republic Bank (NYSE:FRC) received $30 billion in deposits from several big banks as part of a rescue package.
Shares of First Republic and other banks have slumped on fears of a contagion after the collapse of SVB Financial Group and Signature Bank (NASDAQ:SBNY).
The Toronto Stock Exchange's S&P/TSX composite index rose 160.17 points, or 0.83%, to 19,539.01. The index had opened lower as caution prevailed around financial stocks even after Credit Suisse had secured a credit line of up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence.
"Today marked a key reversal for the TSX," said Brandon Michael, senior investment analyst at ABC Funds. "The problem is it's heavy in financials and energy stocks, which tend to do well in a higher interest rate environment ... and as a result of the regional banking crisis, investors are recalibrating their interest rate expectations."
"I expect the TSX to underperform its counterparts south of the border," he added.
Energy stocks rose 0.5% after starting the day losing 1.9% as oil prices fell more than 1%.
Financials, the largest sector by weight on the Canadian index, gained 0.6% while Canada's technology sector rose 1.7%.
Fortuna Silver Mines (NYSE:FSM) shed 6.2% after reporting a fourth-quarter loss, dragging the broader materials sector down 0.01%.
Meanwhile, the European Central Bank raised interest rates 50 basis points as promised, despite financial market chaos and calls by investors to hold back policy tightening at least until sentiment stabilizes.
In Canada, wholesale trade increased 2.4% in January from December on higher sales in machinery, equipment and supplies, and the food, beverage and tobacco products subsectors.