TSX posts biggest gain in 8 weeks as wage pressures ease

The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index on Friday notched its biggest advance in nearly two months as investors welcomed data showing that wage pressures are cooling both domestically and in the United States.

The Toronto Stock Exchange's S&P/TSX composite index ended 307.67 points up, or 1.6%, at 19,814.51, its biggest gain since Nov. 10 and its highest closing level since Dec. 14. For the week, the index was up 2.2%.

"The market is narrowing in on the fall in wage growth both in the U.S. and Canada, which suggests that some of the inflation pressures could be weakening," said Angelo Kourkafas, investment strategist at Edward Jones Investments.

"As long as we can get some slowdown in wage growth while the economy continues to add jobs at a solid pace, it provides some hope that even though the path for a soft landing is narrow, it is potentially achievable."

Canada's economy added 104,000 jobs in December, much more than expected, while growth in the average hourly wage for permanent employees slowed to an annual rate of 5.2% from 5.4%.

Wall Street's main indexes also rallied as U.S. data showed that wages cooled and services activity contracted in December, easing worries over the Federal Reserve's rate-hike trajectory.

All 10 of the Toronto market's major sectors gained ground, led by a 2.5% advance for the energy sector, clawing back some of this week's decline.

The materials group, which includes precious and base metals miners and fertilizer companies, added 1.7% as gold prices climbed to seven-month highs, supported by a sharp drop in U.S. Treasury yields and losses for the U.S. dollar against a basket of major currencies.

Heavily weighted financials rose 1.1% and industrials ended up 2.1%.

(Reporting by Fergal Smith; Additional reporting by Shristi Achar A and Johann M Cherian in Bengaluru; Editing by Sandra Maler)