BUSINESS

Toronto stock market closes up one per cent on oil, copper gains, Europe plan

09/15/2011 08:38 EDT | Updated 01/12/2012 02:08 EST
TORONTO - The Toronto stock market closed more than 100 points higher Thursday as a decline in the influential gold sector was offset by advances in other indexes.

The S&P/TSX composite index moved 131.46 points higher to 12,424.84 with the mining, financial and oil sectors leading the way. It was the third consecutive positive close for the index.

The TSX Venture Exchange was ahead 10.46 points to 1,764.3.

Wall Street also pushed higher, with the Dow Jones up 186.45 points at 11,433.18 and the S&P index ahead 20.43 points at 1,209.1. The Nasdaq index added 34.52 points to 2,607.07.

The gains came as tension over cash-strapped European economies eased following the announcement of a plan to make U.S. dollars more available to troubled European banks.

"Obviously the market was reacting positively to headlines coming out of the eurozone," said Alison Mendes, managing director and portfolio manager at Manulife Asset Management.

The ECB said Thursday that it had decided to launch the three-month loans in co-ordination with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.

"The co-ordinated effort by the central banks is strengthening the euro, it's reducing the U.S. dollar as a safe haven and it's putting the commodity rally mode back in gear," Mendes said.

A big decline in gold -- also considered a safe haven and sold when the economy appears more solid -- added downward pressure to the TSX.

Oil was up 49 cents at US$89.40 a barrel. The energy sector on the TSX added 1.8 per cent with shares in Suncor Energy Inc. (TSX:SU) up 51 cents to C$29.95.

Gold backed off $45.10 to US$1,781.40 an ounce. The gold and materials indices were the only decliners on the TSX, with shares in Barrick Gold Corp. (TSX:ABX) down 11 cents at C$52.05.

Copper added six cents to US$3.96 a pound. The mining sector on the TSX was one of the biggest gainers, up 2.3 per cent with shares in Teck Resources Ltd. (TSX:TCK.B) up 85 cents at C$40.01.

A strong manufacturing report from Statistics Canada also helped buoy investor confidence in the mining and energy sector. Statistics Canada said manufacturing sales rose 2.7 per cent to $46.7 billion in July after three straight declines.

Oil products and steel, aluminum and other primary metal manufacturing were among the biggest contributors to the solid gain, which was nearly twice what economists had expected for July.

The Canadian dollar added 0.7 of a cent to 101.63 cents US.

The financials sector was the biggest advancer on the TSX, up 2.3 per cent, but Mendes said that likely had to do with traders deciding it was time to purchase stocks in the index that have been beaten down since a weaker than expected earnings season a few weeks ago, rather than any lift from the ECB announcement. Shares in Royal Bank (TSX:RY) added $1.48 to $47.47.

A mixed bag of data out of the U.S., including a report that showed unemployment claims last week were the highest they had been in three months, also put pressure on North American markets.

"As much as it looks like the eurozone crisis is being addressed somewhat, the flip side is job growth is still weak in the U.S.," Mendes said.

"That's going to have implications for consumer spending and it just puts more pressure on Obama and the Fed on this side of the pond to take additional steps to spur the economy."

The U.S. Labour Department said Thursday morning that first-time claims for unemployment benefits rose by 11,000 to 428,000 last week. Economists had forecast that applications would drop.

The U.S. Federal Reserve said Thursday that factory output rose 0.5 per cent in August, after increasing 0.6 per cent in July, with strong auto production driving the figure higher for a second straight month in August. But manufacturing was otherwise weak last month, a troubling sign for the economy.

Other data out of the U.S. revealed the deficit in the broadest measure of foreign trade narrowed in the spring. The Commerce Department said that the deficit in the current account narrowed by 1.3 per cent to $118 billion in the April-June quarter, the smallest imbalance since the final three months of 2010.

And the U.S. Labour Department reported the consumer price index rose 0.4 per cent in August, after jumping 0.5 per cent in July. The core index, which excludes volatile food and energy prices, rose 0.2 per cent.

Investor sentiment was also buoyed by the outcome of a teleconference Wednesday between the leaders of France, Germany and Greece, who attempted to quash speculation that a Greek default was imminent and reaffirmed their belief the country remained an "integral part" of the eurozone.

A review of Greek financial progress from the so-called troika -- the European Commission, the European Central Bank and the International Monetary Fund -- is due to resume in coming days.

In Canadian corporate news, shares in Research In Motion Ltd. (TSX:RIM) fell 18 cents to US$29.54 in after hours trading on the Nasdaq exchange after it reported its profit plunged by more than half in the second-quarter, falling short of analyst expectations.

The BlackBerry maker, which keeps its books in U.S. dollars, reported second-quarter profit of US$329 million or 63 cents per diluted share on $4.17 billion in revenue. That compared with a profit of $797 million or $1.46 per share on $4.62 billion a year ago.

Bombardier Inc. (TSX:BBD.B) said its Toronto manufacturing site will handle final assembly of its new Global 7000 and Global 8000 business jets and an RBC Capital Markets survey said interest remains high in Bombardier's new CSeries aircraft but many airlines feel no sense of urgency to place orders. Shares added 3.5 per cent or 15 cents to $4.35.

Silvercorp Metals Inc. (TSX:SVM) is forging ahead with a plan to buy back as many as 10 million shares to bolster its sagging share price in the face of anonymous allegations of a potential $1.3-billion accounting fraud. Shares were up seven per cent or 47 cents to $6.90.