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TSX takes Quebec election in stride

MONTREAL (Reuters) — Canada’s capital markets are so far shrugging off a Quebec election campaign in which a seasoned separatist party wants to retake power and hold another vote on independence for the province.Opinion polls put the ruling, pro-federalist Liberals just 3 percentage points ahead of the Parti Quebecois, whose platform calls for a vote on separation from Canada as soon as possible after a victory in the March 26 election.

To win an election with a majority, the Liberals generally need a 5- to 6-point lead over the PQ, largely because Liberal support is concentrated on the island of Montreal and thinner among Francophone voters in outlying regions. Investors are taking events in the mainly French-speaking province of 7.6 million in stride.

Spreads between comparable Canadian and Quebec bonds narrowed on Thursday, the day after Quebec Premier Jean Charest kicked off the election campaign, and were even seen as a buy, according to traders.

The Canadian dollar rallied during the week to finish at C$1.1591 to the US dollar, or 86.27 US cents, just shy of a two-month high.

The Toronto Stock Exchange’s main index ended the week up about 2 percent.

“I suspect that you could see a few market jitters emerge if it becomes rather clear that the PQ is going to gain a majority,” said Marc Levesque, chief economic strategist at TD Securities. “Markets don’t like uncertainty.”