TORONTO (Bloomberg) - Canadian stocks erased most of their losses after the US Federal Reserve said it will buy an additional $600 billion of Treasuries because of "disappointingly slow" economic progress.

Manulife Financial Corp., North America's third-largest insurer, rose 2.1 percent as financials advanced. Copper producer Taseko Mines Ltd. sank 26 percent as the Canadian government denied its plans for a mine in British Columbia. Agrium Inc., Canada's second-largest fertiliser producer, fell 2.3 percent after missing analysts' earnings estimates.

The Standard & Poor's/TSX Composite Index decreased 9.56 points, or 0.1 percent, to 12,671.86 as of 3.34pm in Toronto. Before the Fed's decision, the index had retreated as much as 0.9 percent.

"It's money in the system, and stocks love liquidity," said Doug Davis, chief executive officer of Davis-Rea Ltd. in Toronto, which manages C$400 million ($394 million). "Some people just need confirmation. They were just waiting for the real thing."

The benchmark climbed 13 percent in four months through yesterday as investors anticipated economic stimulus measures after growth slowed. Most economists in a Bloomberg survey had forecast the Fed would pledge to buy at least $500 billion in securities.

The S&P/TSX Financials Index rose after the Fed released its statement.

Manulife gained 2.1 percent to C$12.88 before the release of its second-quarter financial results. Bank of Montreal, Canada's fourth-largest bank, advanced 0.9 percent to C$60.42. Property and casualty insurer Intact Financial Corp. increased 4.2 percent to C$47.58 after announcing third-quarter earnings that beat the average analyst estimate by 38 percent, excluding certain items.

Agrium fell 2.3 percent to C$85.94 after its third-quarter profit missed the average analyst estimate by 60 percent, excluding certain items. PJ Juvekar, an analyst at Citigroup Inc., cut his rating on the shares to "hold" from "buy".

Taseko Mines slumped 26 percent to C$4.82 a day after Canadian Environment Minister Jim Prentice said the government has refused permission for the Prosperity mine. In July, a government panel had said the project would harm fish habitat, navigation and land use by Indian groups.

Franco-Nevada Corp., which had agreed to buy 22 percent of the gold produced at Prosperity, fell three percent to C$34.50 and dropped as much as 6.4 percent, the most in nine months.