The S&P/TSX composite index soared 133.20 points to 15,026.77, while the Canadian dollar dipped 0.38 of a cent to 89.65 cents US.
Wall Street also snapped back from deep losses from the previous day. The Dow Jones industrials added 167.35 points to 17,113.15, the Nasdaq gained 45.44 points to 4,512.19 and the S&P 500 index saw an uptick of 16.86 points to 1,982.85.
It's been a wild week for investors, who saw the Toronto market plunge more than 200 points Thursday, capping a fifth day of declines. The U.S. indexes did even worse, sporting the steepest declines in two months as the Dow shed nearly 250 points. Despite Friday's gains, all indexes were still down for the week.
Kevin Headland of Manulife Asset Management said investors have been scratching their heads trying to figure out what was behind the deep drops.
"I think it was a reaction and an overreaction," said Headland, who is director of the portfolio advisory group. "If you look at the fundamentals, there is no reason for a major sell-off."
He said usually market direction can be driven by political instability, a bad earnings report from a big firm, or disappointing economic figures. But on Thursday, there was none of that.
"It might be because people are still coming back from the summer slow season and are reallocating their portfolios," said Headland. "But today's immediate snapback shows that the declines were not based on fundamentals."
In corporate news, BlackBerry (TSX:BB) (Nasdaq:BBRY) says it had an adjusted loss of two cents per share in its latest quarter — better than the loss of 16 cents per share that analysts had expected.
However, CEO John Chen, who joined the company last November, concedes the struggling smartphone marker has travelled only half the way on its journey back profitability as it battles intense competition from Apple's iPhone and the Samsung's Galaxy models. It released its latest smartphone, the Passport, earlier this week, with hopes of winning back once-loyal corporate customers.
BlackBerry shares closed up about five per cent, or 56 cents, at $11.44 on the Toronto Stock Exchange.
In New York, shares in Janus Capital Group (NYSE:JNS) surged nearly 43 per cent to US$15.89 on Friday after it was announced that bond investor Bill Gross, a managing director of PIMCO, is joining the company. Gross was one of the founders of PIMCO in 1971, building the Newport Beach, Calif.-based investment company into one of the world's largest bond managers.
The markets also got a boost by the latest U.S. GDP figures.
The third and final official estimate for second-quarter gross domestic product says the world's largest economy expanded at an annual rate of 4.6 per cent in the spring, the fastest pace in more than two years.
The growth in the April to June quarter, which is a sign that companies are investing more and households are spending more, was in sharp contrast to a decline of 2.1 per cent for the first three months of the year, which included unusually harsh winter weather.
On the commodity markets, the November crude contract was up $1.01 at US$93.54 a barrel. December gold bullion dipped $6.50 to US$1,215.40 an ounce and December copper added a penny to US$3.04 a pound.
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