05/01/2012 05:30 EDT | Updated 07/01/2012 05:12 EDT

TSX, dollar, rise on manufacturing improvement

The TSX, the dollar and oil prices all moved higher Tuesday as investors reacted to positive data on manufacturing.

The S&P/TSX composite index closed up 40.10 points at 12,332.79.

The Dow Jones industrial average climbed 65.69 points to 13,279.32. The Nasdaq composite index rose 4.08 points to 3,050.44 while the S&P 500 index added 7.91 points to 1,405.82.

The loonie closed at 101.44 cents US, up 0.22 of a cent.

Light sweet crude for June delivery closed up $1.29 to $106.16 US a barrel in New York.

A measure of Canadian manufacturing, the Royal Bank’s monthly Purchasing Managers’ Index, improved in April by the most in 2012 so far.

The index reached 53.3, up from 52.4 in March, and its highest level in four months, with both output and new orders increasing and firms generally citing greater client demand.

New export orders grew at the fastest pace for a year and manufacturers hired additional staff, although at the slowest pace in three months.

"As the economy south of the border strengthens," RBC chief economist Craig Wright said, "we expect the Canadian manufacturing sector will continue to reap the benefits of increasing U.S. demand for key Canadian exports such as autos, machinery and lumber."

Manufacturing in the U.S. also expanded in April, and at the fastest pace in 10 months, signalling more demand for energy products.

The Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity increased to 54.8 in April. That's the highest level since June and up from 53.4 the previous month. Readings above 50 indicate expansion.

“This month’s increase is yet another sign that the U.S manufacturing sector has been one of the most reliable sources of growth in the U.S. economy since the Great Recession ended," TD Bank economist Alistair Bentley said in a commentary. In addition, Chinese manufacturing expanded for a fifth straight month.

The state-affiliated China Federation of Logistics and Purchasing said Tuesday that its purchasing managers index, or PMI, rose 0.2 percentage points to 53.3 per cent in April, up from March's 53.1 and February's 51.0.

The world's second-biggest economy has been an important prop for a slowly recovering global economy. But there has been nervousness as Beijing tries to engineer a so-called soft landing for its economy as it battles high inflation.

China's economic growth declined to 8.9 per cent in the final quarter of last year after Beijing hiked interest rates and tightened other controls.

However, concerns remained about Europe's struggle with a massive government debt crisis that is hurting the region's economy.