Toronto stocks close out February with a gain, but Dow falls

North American stocks solidified their rally on Monday, buoyed by higher oil and gold prices and signs of optimism about the U.S. economy.

Lack of stimulus out of G20 offset by optimism over oil, precious metals

The TSX has wiped out its losses for February after a volatile start for the year. (Darren Calabrese/Canadian Press)

Toronto stocks solidified their rally on Monday, buoyed by higher oil and gold prices. 

The Canadian dollar fell .14 of a cent to 73.86 cents US, while the TSX closed out February with a gain on the month..

The Toronto index was up 36 points to 12,834 after the federal government announced it had ironed out legal details on Canada's free trade deal with Europe.

On the first day of trading in February, the TSX closed at 12,607 and it's been down more than three per cent in the volatile trading that has marked this month. It's still well off the high of 15,524 set last April, as concern over China and commodities has sent stocks reeling.

U.S. stocks initially rallied, but ended the day lower after late-day selling. That marks the third month of losses on the S&P and Nasdaq indexes.

The Dow fell 123 points to 16,516 and the S&P dropped 16 points to 1,932. 

Gold, oil rise

There have been gains in February in the materials sector, which includes mining companies that have been helped by a surge in the price of precious metals. The price of gold has climbed 10.5 per cent this month and silver is up 4 per cent.

Oil also made gains Monday, with West Texas Intermediate crude up 3.2 per cent or $1.04 cents to $33.83 US at the close of trading. It traded as low as $27 earlier this month.

The U.S. dollar has fallen in the past week, helping both commodities prices and oil prices.

China's central bank guided the tightly controlled yuan sharply lower on Monday morning, contributing to big falls in Chinese stocks.

China's move on bank reserves

Later, the People's Bank of China cut the required reserve ratio for all banks by 50 basis points to 17 per cent in an attempt to inject more money into its slowing economy. That is still the highest reserve level in the world.

Global stock markets were mixed and did not share the optimism that emerged in North American trading.

They were weighed down by the failure of the world's leading economic policymakers at the G-20 to announce any new measures to boost the global economy.

Finance ministers and central bankers of the Group of 20 rich and developing pledge more "growth-friendly" tax and spending policies in a vague statement at the end of a weekend meeting.

But investors were disappointed that no specific measures were mentioned.

The Shanghai market dropped 2.8 per cent, Germany's DAX and the FTSE were down slightly and the Euro Stoxx index rose a modest 16 points.

With files from the Canadian Press