03/23/2012 08:34 EDT | Updated 05/23/2012 05:12 EDT

TSX closes higher on commodities bounce, despite disappointing U.S. housing data

TORONTO - The Toronto Stock Exchange closed with a triple-digit gain Friday as commodity prices bounced back, overshadowing a disappointing report about the U.S. housing market that limited momentum on New York markets.

The S&P/TSX composite index was up 103.9 points to 12,465.7. All sectors were in positive territory, with the influential materials index leading the way. The junior TSX Venture Exchange added 14.9 points to 1,555.6.

The main index was down marginally for the week, with a 0.25 drop as Friday's gains largely made up for lower closes most days.

The Canadian dollar was up 0.10 cents at 100.13 cents US after earlier sliding below parity.

Traders took in data from Statistics Canada that found gasoline and food continued to push up inflation in February to 2.6 per cent, the second consecutive monthly increase.

Core inflation — the underlying pressure on consumer prices excluding volatile items such as energy and fresh foods — rose two notches to 2.3 per cent, above the Bank of Canada's two per cent target line.

That's the fastest pace of price increases since 2008, said Emanuella Enenajor of CIBC World Markets.

"It seems there’s no solace for consumers from high prices at the pump. An increase in the cost of gasoline in February was yet again a contributor to the month’s near-consensus 0.1 per cent gain," she said.

"The rise in the ex-volatile rate could prove temporary, so the Bank of Canada will likely look through today’s elevated reading — suggesting limited policy implications."

Gasoline prices have been high as crude has hovered between US$105 and US$110 a barrel for the last month, up from $75 in October, amid worries that a military strike by Israel or the U.S. on Iran's nuclear facilities could disrupt global supplies.

Prices spiked Friday after a report from Petrologistics said Iran's shipments tumbled by 300,000 barrels a day, or 14 per cent, this month. Less oil on the market means remaining barrels get more expensive.

May oil was up $1.52 to US$106.87 a barrel on the New York Mercantile Exchange. The energy sector was up 0.9 per cent with shares in Canadian Natural Resources (TSX:CNQ) falling 12 cents to C$33.68.

Gold bullion was up $19.90 to US$1,662.40 an ounce. On the TSX, the gold-heavy materials index rose 1.6 per cent with shares in Barrick Gold Corp. (TSX:ABX) up 72 cents to C$43.77.

Copper prices added four cents to US$3.81 a pound. The mining sector added 0.8 per cent with shares in Teck Resources (TSX:TCK.B) up nine cents at C$35.24.

The Canadian market outperformed many global markets that moved lower Friday, a bounce driven by upward moves in commodity prices, said Stephen Lingard, managing director at Franklin Templeton Multi-Asset Strategies.

The relatively consistent inflation rate reported by Statistics Canada also signals a healthy economy, which could also be buoying investors on the TSX, he added.

Meanwhile, Wall Street turned around earlier losses to close higher as traders weighed strong earnings reports from several U.S. companies against the prospects of a global economic slowdown and data showing new home sales in the United States fell for a third straight month in February.

"The market is a little bit confused on a short-term basis," Lingard said, adding that the softer data out of the U.S. this week is likely just a blip in a longer-term trend showing the economy is recovering.

Companies from a wide range of sectors — Nike, Oracle, Tiffany and Discover Financial — have reported stellar earnings this week. However, the strength comes tinged with worry for these companies, which rely on strong sales in Asia and Europe. Reports in China and Europe earlier in the week pointed to a likely slowdown in those economies.

The Dow Jones industrial average was up 34.6 points to 13,080.7, the Nasdaq 4.6 points higher at 3,067.9 and the broader S&P 500 index added 4.3 points to 1,397.1.

The U.S. Commerce Department said new home sales fell 1.6 per cent last month to a seasonally adjusted annual rate of 313,000. Sales have fallen nearly seven per cent since December. But prices surged to their highest level in eight months, suggesting builders anticipate more demand in the months ahead.

"U.S. new home sales surprisingly fell 1.6 per cent in February to a 313K rate, against consensus expectations for a 1.3 per cent increase," said Andrew Grantham of CIBC World Markets.

"Still, upward trends in housing starts and building permits recently suggest a degree of confidence among builders that the gradual uptrend in new home sales will re-emerge as the year wears on."

Meanwhile on the TSX, Air Canada (TSX:AC.B) stock was unchanged at 82 cents. It earlier fell by as much as five per cent after dozens of flights were cancelled or delayed amid a wildcat strike by Air Canada ground workers at Pearson International Airport in Toronto. Union officials said late Friday morning that the strike that started in Toronto and spread to other airports was over.

Pengrowth Energy Corp (TSX:PGF) plans to take over NAL Energy Corp. (TSX:NAE) in stock-swap deal that values NAL at some $1.9 billion, including debt. Based on Thursday's closing prices of $9.95 for Pengrowth stock and $7.80 for NAL shares, the offer of 0.86 of a Pengrowth share for each NAL share represented a premium of 9.7 per cent. Shares in Pengrowth fell 24 cents to $9.71, while shares in NAL rose 5.9 per cent or 46 cents to $8.26.

Research in Motion (TSX:RIM) said developers will get a taste of the much anticipated new BlackBerry 10 operating system in May. Attendees at the company's developers' conference in Orlando, Fla., will get a prototype device, called the BlackBerry 10 Dev Alpha, which will function as a testing platform for programming apps. RIM shares were off eight cents at $13.67.