The S&P/TSX composite index started the day off in negative territory. But the TSX gained momentum in the afternoon to jump 167.24 points to 12,277.13 amid a stock upgrade for BlackBerry, acquisition news in the consumer sector and gains in defensive stocks that have been beaten down lately.
The Canadian dollar was ahead 0.45 of a cent to 98.37 cents US.
U.S. indexes, which lost ground most of the week, also turned higher following positive readings on retail sales and claims for jobless benefits. The Dow Jones industrials surged 180.85 points to 15,176.08, the Nasdaq rose 44.93 points to 3,445.37 and the S&P 500 index was up 23.84 points to 1,636.36.
The U.S. Commerce Department said retail sales increased 0.6 per cent in May compared with April. That’s up from a 0.1 per cent gain the previous month and the fastest pace since February. The April gain was led by a 1.8 per cent jump in auto sales, the biggest increase in six months.
And the number of Americans seeking unemployment benefits dropped 12,000 last week to a seasonally adjusted 334,000.
Central bank worries have pressured markets, with the TSX having registered triple-digit slides in each of the two previous sessions.
Worries about central banks have been growing ever since Federal Reserve chief Ben Bernanke said on May 22 that the Fed might pull back on its US$85-billion-a-month bond-buying program, known as quantitative easing, if economic data improves, especially hiring.
The QE program has fuelled a strong rally on U.S. markets.
"The markets have become more and more dependent on the steroids that the central banks across the globe are providing," said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory, a Raymond James company.
"And it takes more and more now for the market to become intoxicated."
Also, Japanese media reports are saying overseas hedge funds may be dumping the country's equities following disappointment over the Bank of Japan’s decision earlier in the week to refrain from additional monetary easing measures.
Those reports helped send Tokyo's Nikkei 225 index plunging 6.4 per cent, while the yen strengthened 1.5 per cent against the greenback.
In April, the Bank of Japan announced a massive stimulus in an attempt to get inflation up to two per cent. The euphoria that drove the Nikkei up to five-year highs has been followed by wild fluctuations. The index is now down about 20 per cent from its May 23 peak, leaving the market in bear market territory.
The tech sector was ran ahead 2.88 per cent as BlackBerry (TSX:BB) improved by 83 cents to $14.70 after Societe Generale raised its rating on the stock to "buy" from "sell," saying channel checks show the Canadian smartphone maker’s new devices are selling well.
The company earlier this year introduced the Z10, which has a touch-screen, and the Q10, which targets BlackBerry loyalists with a physical keyboard.
The base metals sector also ran ahead 2.88 per cent as July copper lost four cents to US$3.18 a pound. Teck Resources (TSX:TCK.B) was up 69 cents to C$24.75.
The consumer staples sector rose 2.29 per cent after Empire Company Ltd. (TSX:EMP.A) and its main subsidiary, Sobeys Inc. announced Wednesday after the close that they are buying rival Canada Safeway Ltd. for $5.8 billion in cash. Empire shares jumped $7.16 or 10.59 per cent to $74.77.
Telecoms and utilities were also positive after registering sharp declines earlier in the week.
Speculation about cutting back on the QE program has had the effect of pushing U.S. Treasury yields sharply higher, which in turn has had a negative effect on TSX defensive/interest-rate sensitive sectors such as REITS, utilities, telecom and pipeline stocks.
"It’s sort of a warning bell for interest-sensitive securities because many don’t realize how sensitive these are," Pashootan said.
"And you’re getting that enhanced yield (from those stocks) because there is the potential for volatility."
Telus Corp. (TSX:T) ran up $1.05 to $34.72 while Algonquin Power & Utilities rose 27 cents to $7.51.
Financials gained 1.56 per cent while TD Bank (TSX:TD) climbed $1.42 to $82.24.
The energy sector was ahead one per cent as the better than expected U.S. economic data helped push the July crude oil contract up 81 cents to US$96.69 a barrel on the New York Mercantile Exchange. Canadian Natural Resources (TSX:CNQ) was 48 cents higher at C$29.48.
The gold sector was the weakest advancer, up about 0.35 per cent as August bullion on the Nymex fell $14.20 to US$1,377.80 an ounce. Goldcorp Inc. (TSX:G) gained 27 cents to C$28.92.
In other corporate news, shares in Transat A.T. Inc. (TSX:TRZ.B) ran up 73 cents or 13.75 per cent to $6.04 as the travel company posted a net loss of $22.8 million or 59 cents per share in the quarter ended April 30. On an adjusted after-tax basis, Transat lost $1.43 million or four cents per share, which was far better than the 26 cents per share loss estimated by analysts.
Shares in Dorel Industries Inc. (TSX:DII.B) dropped $3.37 or 8.69 per cent to $35.40 as the company warned that earnings from its recreational unit will be weaker than expected. The Montreal-based company cited wet weather which has slowed bicycle sales.