Stocks, commodities rally after G20 meeting
U.S. dollar falls as finance ministers vow stimulus will continue
The U.S. dollar fell against other currencies Monday as G20 finance ministers ended their weekend meeting in St. Andrews, Scotland, pledging to continue global measures to stimulate the economic recovery.
The ministers promised to "continue to provide support for the economy until the recovery is assured" — in effect telling the markets that borrowing costs will not be rising any time soon.
The euro pushed back up above $1.50 US before settling back just below that level, and financial markets and commodities climbed.
On the Toronto Stock Exchange, the S&P/TSX composite index closed up 236.5, or more than two per cent, to 11,486.9 and the December bullion contract finished up $5.70 to $1,100.80 an ounce U.S. on the New York Mercantile Exchange.
The Canadian dollar finished up 1.57 cents to 94.57 US. Oil closed up $2.00 to 79.43 US, pushed higher also by concerns about possible production disruptions as hurricane Ida entered the Gulf of Mexico.
Continued low U.S. interest rates are stimulating economic growth but also encourage the carry trade, where traders borrow dollars at low rates to finance riskier investments, such as stocks and oil.
Canada's Finance Minister, Jim Flaherty, dismissed Britain's proposal to tax financial transactions as insurance against another financial crisis.
U.K. prime minister Gordon Brown had suggested it was time the world had a "better economic and social contract to reflect the global responsibilities of financial institutions to society."
Flaherty said the idea was "not particularly attractive" to him because the Conservatives do not want to raise taxes.
"I think the concept is sound," he said. "I think the idea … has some merit and is worth pursuing. It's not particularly a priority in the Canadian situation since we have not had any of our financial institutions fail."
Many world leaders have spoken of the need for China to allow its exchange rates to float, in a move which would encourage U.S. exports, and a reduction of its huge trade deficit, and for China to spend more on imports to take up some of the slack in U.S. trade.
But the G20 ministers did not come up with specific measures to address those problems.
(With files from The Associated Press and The Canadian Press)