The S&P/TSX composite index finished up 9.13 points at 12,667.22.
According to reports, Valeant (TSX:VRX) is close to a $9-billion deal to acquire eye-care company Bausch & Lomb Holdings Inc. from Warburg Pincus LLC. Valeant shares were up $10.18 at $87.02.
On Wall Street, markets were mixed after being down for most of the day. The Dow Jones industrials average saw an uptick of 8.60 points to 15,303.10, but the Nasdaq lost 0.28 of a point to 3,459.14 and the S&P 500 dipped 0.91 of a point to 1,649.60.
The Canadian dollar was down 0.25 of a cent at 96.89 cents US.
On Friday, the U.S. Commerce Department reported better-than-expected durable goods orders in April that suggested encouraging news for U.S. manufacturers.
The department said orders rose 3.3 per cent last month after a 5.9 per cent decline in March and more than double the 1.5 per cent increase predicted by analysts. It says the figure was buoyed by more demand for military and civilian aircraft and an increase in business investment.
But the news was not enough to reverse Thursday's declines, which had been prompted by weak Chinese manufacturing data and worries that the U.S. Federal Reserve might start withdrawing monetary stimulus sooner than expected.
Jennifer Radman, a portfolio manager with Caldwell Securities Ltd., said it was not surprising that the U.S. markets showed little reaction to the durable goods figures.
"At this point, we've had such a strong run in the market... so I think a lot of people are expecting a downturn," she said.
Radman said some stocks in her portfolios have risen up to 20 per cent in the past month and perhaps investors are now speculating more about how long those highs might be able to last.
"I think the markets sometimes use different news items as an excuse to take money off the table," she said. "It might just be a bit of profit-taking. It sort of happens when the market has had such a strong run."
Earlier this week, Fed chairman Ben Bernanke said the central does not plan on scaling back or ending its stimulus now but will consider it as early as next September. Many analysts had expected the stimulus to continue into 2014.
The Fed has been buying $85 billion worth of bonds every month in an effort to keep interest rates low and encourage investors to put money into stocks and other risky assets. If the Fed slows or ends its bond purchases, investors fear it could lead to a shift of money away from stocks.
Meanwhile, commodities continued to see modest declines, putting a drag on the resource-heavy TSX.
June gold bullion lost $5.20 to US$1,386.60 an ounce, while shares in Barrick Gold Corp. (TSX:ABX) fell on news that an environmental regulator in Chile has stopped construction and imposed sanctions on Barrick's $8.5-billion Pascua-Lama project, citing "serious violations" of its environmental permit.
The world's largest gold mining company was also fined $16 million, the maximum allowable under Chilean law, after Barrick acknowledged that it failed to keep its promises to build systems for containing contaminated water.
Barrick's shares were temporarily halted, but once resumed, dropped 2.14 per cent, or 43 cents, to $19.69. The gold sector was the biggest decliner on the TSX, dipping 1.27 per cent.
The July crude contract was down 10 cents to US$94.15 a barrel as the energy sector lost 0.31 per cent, and July copper was down a penny at US$3.29 a pound, while the metals and mining sector fell slightly by 0.05 per cent.
The Toronto exchange got a lift by shares in Manitoba Telecom Services (TSX:MBT), which rose 5.7 per cent, or $1.83 to $33.93. Winnipeg-based MTS announced that it will be selling its national business telecommunications arm, Allstream, to Accelero Capital Holdings in a deal worth $520 million.
Shares in National Bank (TSX:NA) also climbed, up nearly two per cent, or $1.46, to $76.91 after Canada's sixth-largest bank said it was hiking its dividend and buying back some of its shares after its second-quarter profit beat analyst estimates by a wide margin. The remaining large Canadian banking and financial institutions were all set to release their earnings next week.