The S&P/TSX composite index gained 65.91 points to 12,674.73 while the TSX Venture Exchange was up 2.95 points to 1,233.15.
The Canadian dollar was up 0.04 of a cent to 101.45 cents US.
U.S. indexes shot ahead as weekly applications for unemployment benefits hit a five-year low and U.S. home construction surged last month.
At the same time, there were earnings disappointments in the banking sector and further Dreamliner woes for aircraft maker Boeing Inc.
The Dow industrials jumped 84.79 points to 13,596.02, while the Nasdaq composite index gained 18.46 points to 3,136. The S&P 500 index rose 8.31 points to a fresh, five-year high of 1,480.94.
Builders broke ground on U.S. houses and apartments at a seasonally adjusted annual rate of 954,000 in December, up 12.1 per cent from November. The report capped off the best year for U.S. home construction since the real estate meltdown.
"There is no denying that the housing market recovery is solidifying and we expect construction activity to ramp up to the one million annualized threshold by the end of this year," said TD Bank economist Michael Dolega, adding the improvement in the housing sector is good news for the jobs picture.
"The strengthening housing recovery appears to have shown up in construction employment, which rose 30,000 in December. With sectoral employment down over two million off its 2006-2007 peak, we expect the construction sector to add more than half-million jobs over the course of this year."
Weekly unemployment benefit applications in the U.S. fell 37,000 to a seasonally adjusted 335,000. That’s comparable to numbers seen just after the recession began.
The weekly numbers are subject to a lot of seasonal volatility, but the overall trend suggested an improving landscape.
Boeing shares gained 1.24 per cent following a string of losses even as U.S. and European authorities grounded the company’s 787 Dreamliner, its newest and most technologically advanced airliner, until the risk of battery fires is resolved. Boeing stock dropped 3.4 per cent the day before.
Japan's two largest air carriers voluntarily grounded their 787s on Wednesday following an emergency landing by one of the planes in Japan.
On the earnings front, Bank of America shares were down 4.24 per cent after it fell well short on revenue expectations.
Citigroup also registered a big earnings miss, with earnings per share of 69 cents ex-items against the 96 cents that analysts had expected and its shares were down 2.92 per cent.
The tech sector was the leading advancer on the Toronto market, up 1.55 per cent with CGI Group (TSX:GIB.A) ahead 70 cents to $24.86.
Research In Motion Ltd. (TSX:RIM) gained 13 cents to $14.68. Its stock has risen over 25 per cent in the last week as investors anticipate the unveiling of RIM's new BB10 product next Wednesday.
The consumer discretionary sector was ahead 1.11 per cent, paced by strength in auto parts companies. Linamar Corp. (TSX:LNR) gained $1.34 to $26.75 while Magna International (TSX:MG) climbed 70 cents to $52.84.
The base metals sector was up 0.71 per cent as March copper on the New York Mercantile Exchange rose six cents to US$3.66 a pound. Taseko Mines (TSX:TKO) climbed 12 cents to C$3.37 and Teck Resources (TSX:TCK.B) advanced 43 cents to $36.71 .
The chief executive of mining giant Rio Tinto PLC and another senior executive stepped down after the company announced $14 billion in writedowns from its Alcan aluminum business and a coal company in Mozambique. Its shares were off 21 cents to US$54.82 in New York.
Oil prices headed higher, building on Wednesday’s gain of almost $1 after the U.S. Energy Information Administration said crude supplies declined by one million barrels last week. Analysts polled by Platts had expected a 2.5-million-barrel climb.
The February crude contract gained $1.25 to a four-month high of US$95.49 a barrel and the energy sector gained 0.61 per cent. Canadian Natural Resources (TSX:CNQ) was up 59 cents to C$29.33.
Prices were also supported by an attack on a natural gas plant deep in the Sahara in Algeria. Islamist militants are holding dozens of hostages.
Industrials were also higher as Bombardier Inc. (TSX:BBD.B) gained four cents to $4.08.
The gold sector was the only TSX decliner, down about 0.3 per cent as February bullion erased early losses to gain $7.60 to US$1,690.80 an ounce. Kinross Gold Corp. (TSX:K) faded 12 cents to C$9.37.
On the earnings front, chip giant Intel reported quarterly earnings of 48 cents US a share, three cents better than analyst forecasts. Its shares were up 1.1 per cent in after market trading in New York.
Looking ahead to Friday, traders waited for China’s growth data to help assess the strength of the global economy. China will release fourth-quarter growth data for 2012 as well as overall GDP figures for the year.
In other corporate developments, Sun Life Financial Inc. (TSX:SLF) and the Malaysian state investment company are teaming up to purchase 98 per cent of a Malaysian life insurance company. Sun Life and Khazanah Nasional are purchasing the CIMB Aviva Assurance life insurance company as well as CIMB Aviva Takaful for a total shared cost of $586 million. Sun Life shares gained 30 cents to $28.24.
H&R Real Estate Investment Trust (TSX:HR.UN) announced a friendly agreement to buy Primaris Retail REIT (TSX:(PMZ.UN) in a cash and stock deal valued at some $2.8 billion, topping a rival offer by a consortium led by KingSett Capital. H&R units lost 51 cents to $23.28 while Primaris units added seven cents to $26.58.