TSX extends 2017 rally on gold miners; nears all-time high

By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index extended its new year rally into a third day on Thursday, as gold miners and other materials stocks rose with higher commodity prices and telecom stocks also notched gains.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended the day up 69.83 points, or 0.45 percent, at 15,586.58, within striking distance of its all-time high of 15,685.13, which was hit in September 2014.

"I think the markets can grind higher from here," said Manash Goswami, portfolio manager at First Asset Investment Management. "I'm a little more constructive than I had been last year," he added.

The most influential movers on the index included two of the world's largest gold producers, with Barrick Gold Corp (Toronto:ABX.TO - News) jumping 5.6 percent to C$23.02 and Goldcorp Inc (Toronto:G.TO - News) up 4.1 percent to C$19.78.

Torex Gold Resources (Toronto:TXG.TO - News) surged 21.4 percent to C$26.75 after announcing high-grade results from exploration drilling close to existing operations and Alamos Gold Inc (Toronto:AGI.TO - News) jumped 14.4 percent to C$11.37 after saying its Kirazli project in Turkey gained government permits, allowing development to begin.

The materials group, which includes precious and base metals miners and fertilizer companies, added 3.8 percent.

A slew of smaller gold miners also gained as gold prices jumped to a one-month high, but Goswami said further gains may be limited by a likely extension of U.S. dollar strength.

"We're not super bullish on gold equities at the moment just given that we see further rate hikes from the Fed and continuous strength in the U.S. dollar so we expect gold to lag," he said.

Telecom stocks rose 0.8 percent overall, with Telus Corp (Toronto:T.TO - News) up 1.6 percent at C$44.20 and Rogers Communications Inc (RCIb.TO) adding 0.9 percent to C$52.67.

The energy group retreated 0.6 percent even as oil prices rose after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to lower global supply.

Penn West Petroleum Ltd (Toronto:PWT.TO - News) advanced 3.7 percent to C$2.53 after it raised its 2017 capital budget and upped its production forecast.

The value of Canadian equity issues rose to an all-time high in 2016, driven by large deals in the energy and mining sectors, according to Thomson Reuters data released on Thursday.

Canadian producer prices increased by 0.3 percent in November from October on higher costs for vehicles and primary non-ferrous metal products, Statistics Canada said.

(Reporting by Alastair Sharp; Editing by Meredith Mazzilli and James Dalgleish)