By John Tilak
TORONTO (Reuters) - Canada's main stock index powered ahead in a late surge on Thursday, led by strength in financial and industrial shares, on relief that banks in Cyprus reopened relatively smoothly following a bailout deal.
But the market's gains were kept in check by declines in gold stocks that weakened with the bullion price as tension over Cyprus lifted.
In a sign of stability, Cypriots queued calmly at banks as they reopened under tight controls imposed on transactions to prevent a run on deposits after the government was forced to accept a stringent EU rescue package to avert bankruptcy.
The banking crisis in the island has weighed on investors the past week, and some worry that it is an indication of shortcomings of the banking systems in the broader euro zone, or even the rest of the world.
"The bears would like to say there's this contagion effect," said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management. "The contagion effect is more important for European banks, not so much for U.S. and Canadian banks."
"People are still skittish, but money is coming into equities," she said.
The Canadian benchmark index recorded a 2.5 percent gain in the first quarter, compared with a 10 percent jump in the S&P 500.
The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed up 50.25 points, or 0.40 percent, at 12,749.90. Eight of the 10 main sectors on the index were higher.
Investors also tracked data that showed a rise in U.S. jobless claims, though not enough to suggest the labor market recovery was at risk. However, the U.S. economy grew moderately in the fourth quarter.
"It's a mixed picture. We are in a period of stagnation" said Fred Ketchen, director of equity trading at ScotiaMcLeod.
The industrials group gained 1.6 percent
The materials sector, which includes mining stocks, was down 0.5 percent, with the price of gold declining. Kinross Gold Corp (Toronto:K.TO - News) fell 0.9 percent to C$8.04, and Goldcorp Inc (Toronto:G.TO - News) fell 0.3 percent to C$34.18.
Shares of BlackBerry climbed nearly 2 percent to C$15.09 and helped the information technology sector rise 1.4 percent.
Avigdor said the stock has a place in investment portfolios.
"The expectations are so low that it has the potential to beat them," she said.
(Editing by Bob Burgdorfer)