03/01/2012 08:39 EST | Updated 05/01/2012 05:12 EDT

Canadian dollar rises, commodities advance in wake of strong economic data

TORONTO - The Canadian dollar closed higher Thursday amid strong economic data from China and the United States that raised demand prospects for oil and metals.

The commodity sensitive loonie rose 0.37 of a cent to 101.43 cents US.

China's manufacturing sector gained momentum in February, helped by strength in new orders, export demand and production. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose 0.5 points to 51.0 from January’s 50.5 and December’s figure of 50.3 in a third straight month of steady improvement.

The better than expected Chinese data is good news for Canada since the world's second-biggest economy has a huge appetite for commodities, including coal, copper and oil.

The May copper contract climbed five cents to US$3.93 a pound.

Signs of an improving U.S. economy and hopes that China will loosen lending requirements to encourage growth boosted copper prices about 2.5 per cent in February. China is the world's biggest consumer of copper, which is viewed as an economic bellwether as it is used in so many businesses.

Oil prices rose for a second day with the April contract on the New York Mercantile Exchange ahead $1.77 to US$108.84 a barrel.

Bullion prices gained after tumbling almost US$80 on Wednesday as the latest U.S. economic data and comments by U.S. Federal Reserve chairman Ben Bernanke sent a signal that the central bank won't be embarking on another round of quantitative easing, which has involved printing money in order to buy government bonds.

Gold prices have benefited from past rounds of QE and speculation over further measures because of the inflation implications of such stimulus measures.

The April bullion contract on the Nymex was up $10.90 to US$1,722.20 an ounce.

Positive American economic data also encouraged traders. The U.S. Commerce Department said consumer spending increased 0.2 per cent in January. That's better than December's reading of no change.

Americans' income rose 0.3 per cent, the second straight monthly increase.

Also, the number of people seeking unemployment benefits fell slightly last week to the lowest point in four years, a further sign that the U.S. job market is steadily improving. A seasonally adjusted 351,000 people sought unemployment aid, down from 353,000 the previous week.

One point of weakness was the latest read on U.S. manufacturing. The Institute for Supply Management’s index on the sector fell last month to 52.4 from 54.1 in January. It was the lowest reading since November. Any reading above 50 indicates expansion.

New orders increased, but at a far slower pace than the month before. Production and employment also grew more slowly.