The S&P/TSX composite index jumped 111.77 points to 12,461.93, led by mining and energy stocks, while the TSX Venture Exchange gained 12.67 points to 1,634.34.
The Canadian dollar gained 0.72 of a cent to 100.9 cents US after the Bank of Canada said it was leaving its key rate at one per cent.
The bank also noted that economic conditions have improved over the past few weeks. It said Canada has also seen conditions brighten somewhat, and predicted the economy is growing faster in the first three months of this year than the 1.8 per cent advance expected in its previous analysis.
Traders also looked ahead to the release Friday of the U.S. non-farm payrolls report for February. Statistics Canada also releases its report on employment in Friday, with analysts estimating 15,000 jobs were created countrywide.
Ahead of those reports, there were data Thursday showing that slightly more people applied for U.S. unemployment benefits last week. But the overall level stayed low enough to suggest the job market is strengthening.
The U.S. Labour Department said Thursday that weekly applications increased by 8,000 to a seasonally adjusted 362,000, the highest level since January.
The Dow industrials ran ahead 70.61 points to 12,907.94.
The Nasdaq was up 34.73 points to 2,970.42 and the S&P 500 index climbed 13.28 points to 1,365.91.
The TSX snapped a three-session losing run Wednesday that amounted to a loss of over 400 points amid worries about slowing Chinese growth and signs of slowing economic activity elsewhere such as the eurozone and Brazil.
The loss follows a rally that started in October and had run pretty much non-stop, leaving the main index up as much as 13.6 per cent from the lows of October.
But analysts don't think that a major correction is in the cards.
"The pullback that we have seen is definitely healthy, definitely the markets have been overbought and overextended," said Chris Kuflik, wealth adviser at ScotiaMcLeod in Montreal.
"Could it get bigger? Possibly, sometimes these things tend to feed on themselves but at this point I wouldn’t read a lot into it."
There was rising confidence that Greece had enough private creditors on side by a deadline of mid-afternoon Thursday to complete a debt swap that would see those investors exchange their Greek bonds for new ones with a 53.5 per cent lower face value, lower interest rates and longer maturity dates. The hope is that by slashing the country’s national debt by €107 billion, Greece can gradually return to growth.
If not enough private bondholders take part in the exchange, Greece could default in the next two weeks.
Athens won’t release final results until Friday morning, but early signs are indicating that the swap will succeed.
"It appears that we should have a positive resolution in Greece," added Kuflik, adding that even with Greece out of the way, chances are there will be something else out of Europe to grab the markets’ attention.
A government official said participation in the bond swap deal by banks, pension funds and other investors holding more than half the total debt in public hands was already above 75 per cent. New legislation will allow Greece to force holdouts into accepting the deal if overall participation is not high enough.
The base metals sector rose two per cent as May copper rose two cents to US$3.79 a pound. Teck Resources (TSX:TCK.B) climbed 38 cents to $36.20 while HudBay Minerals (TSX:HBM) improved by 48 cents to $11.67.
The April crude contract on the New York Mercantile Exchange gained 42 cents to US$106.58 a barrel. Prices shot up almost US$1.50 Wednesday following a report showing a lower than expected rise in U.S. inventories last week.
The energy sector gained almost one per cent with Suncor Energy (TSX:SU) ahead 55 cents to $34.27.
Canadian Natural Resources Ltd. (TSX:CNQ) posted a profit of $832 million, compared to a net loss of $309 million a year ago. Revenue grew to $4.2 billion from $3.4 billion. The oil and gas producer also said that its quarterly dividend will rise 17 per cent to 10.5 cents. Its shares climbed 21 cents to $35.35.
The TSX financial sector was up 1.24 per cent with TD Bank (TSX:TD) ahead $1.36 to $81.70.
CIBC (TSX:CM) reported that quarterly adjusted earnings came in at $1.97 a share, beating analyst forecasts by four cents. The bank posted net income of $835 million, or $1.93 per share, an increase from $763 million, or $1.80 per share, a year ago as it benefited from stronger results in its Canadian retail banking business and mortgages. However, it didn't raise its dividend, unlike TD Bank (TSX:TD) Royal Bank (TSX:RY) and Scotiabank (TSX:BNS) and its shares lost 16 cents to $76.11.
The gold sector shook off early losses and rose about 0.5 per cent as bullion closed up $14.80 to US$1,698.70 an ounce. Goldcorp Inc. (TSX:G) gained 52 cents to $47.12.
In other earnings news, grain handling and food processing company Viterra Inc. (TSX:VT) reported first-quarter net earnings of $77.7 million or 21 cents per share, compared with $100.7 million or 27 cents per share in the same 2011 period. Its shares gained 18 cents to $10.98.
And Air Canada (TSX:AC.B) shares were a penny higher to 94 cents after Federal Labour Minister Lisa Raitt stepped in to prevent a work stoppage at the carrier next week. The minister is sending the dispute between the airline and two of its unions to the Canadian Industrial Relations Board.