The S&P/TSX composite index gained 15.28 points to 11,853.61, while the TSX Venture Exchange dipped 0.36 of a point to 1,197.01.
The Canadian dollar was up 0.06 of a cent to 100.82 cents US.
U.S. markets lost momentum late in the session even as the Commerce Department reported that retail sales rose 0.8 per cent in July, the largest increase since February. Economists had expected a gain of 0.3 per cent.
The Dow Jones industrials added 2.71 points to 13,172.14, the Nasdaq composite index dropped 5.54 points to 3,016.98 and the S&P 500 index slipped 0.18 of a point to 1,403.93.
Germany, Europe’s biggest economy, posted 0.3 per cent growth in the second quarter, beating expectations of a 0.2 per cent increase, though slowing from the first quarter’s 0.5 per cent growth.
But at the same time, another report showed that the chronic debt problems of the 17-country eurozone monetary union are pushing Europe closer to recession.
Eurostat, the European Union’s statistics agency, said that the economies of both the eurozone and the wider 27-country EU shrank by a quarterly rate of 0.2 per cent in the second quarter. In the first quarter, output for both regions was flat. A recession is officially defined as two straight quarters of falling output.
Spain, Portugal, Cyprus and Greece are already mired in recession.
"Certainly the macroeconomic news has been less negative," said Paul Vaillancourt, chief investment officer at Canadian Wealth Management in Calgary.
"But clearly we’re seeing a global growth slowdown and the data that comes in is mixed. Europe will regrettably fall into recession if it’s not already there."
On a brighter note, Vaillancourt thinks Canada and the U.S. are still "pretty good places to invest and even if we’re seeing an earnings growth slowdown, balance sheets are in great shape in Canada and the U.S. and you have debt/equity ratios at five-year lows."
The worsening debt crisis has dimmed the prospects for an economic recovery in the rest of the world.
Policy-makers are urging more decisive action, particularly from the European Central Bank, to deal with the debt crisis to restore confidence to the global economy.
Markets have found traction recently after the ECB promised last month to do "whatever it takes" to keep the monetary union intact.
Disappointing economic data has also raised hopes that central banks in the U.S. and China will move to undertake further stimulus measures.
Financials led TSX advances, up 0.64 per cent with Manulife Financial (TSX:MFC) ahead 13 cents to $11.36 while Royal Bank (TSX:RY) ran up $1.08 to $51.98.
The TSX energy sector was up 0.44 per cent as the positive economic data helped push the September crude contract on the New York Mercantile Exchange 70 cents higher to US$93.43 a barrel. Canadian Natural Resources (TSX:CNQ) was ahead 51 cents to C$30.66 and Imperial Oil (TSX:IMO) climbed 31 cents to $45.59.
The base metals sector was the weakest group, falling more than three per cent while metal prices stabilized after two days of declines in the wake of surprising drops in Chinese exports and Japanese economic growth. The September copper contract on the Nymex edged up about half a cent to US$3.36 a pound. First Quantum Minerals (TSX:FM) gave back $1.03 to $19.03 and Teck Resources (TSX:TCK.B) fell 96 cents to $28.62.
The tech sector was also lower, reflecting a 6.7 per cent drop at Research In Motion Ltd. (TSX:RIM) to $7.48.
The gold sector dipped about 1.1 per cent as December bullion shed early gains and fell $10.20 to US$1,602.40 an ounce. Centerra Gold (TSX:CMG) faded 37 cents to C$6.81 while Iamgold Corp. (TSX:IMG) climbed 15 cents to $11.33.
On the corporate front, a showdown could be brewing between fertilizer giant Agrium (TSX:AGU) (NYSE:AGU) and a U.S. hedge fund, which has accumulated a significant minority stake in the Calgary-based company. Its shares rose 40 cents to $95.93.
Agrium says it has carefully evaluated and rejected the idea of spinning off its retail division, saying shareholders would face too much risk. Agrium made the statement after the Wall Street Journal reported U.S. hedge fund Jana Partners had purchased nearly five per cent of Agrium's stock in a move to push the fertilizer giant to cut costs and sell its retail arm.
Shares in SouthGobi Resources Ltd. (TSX:SGQ) tumbled 22.7 per cent to $2.86 on the TSX. The plunge came a day after its CEO said he believes Chinese company Chalco will pull its offer for a controlling stake in the miner as it faces a crackdown on foreign investment by the government in Mongolia, where its operations are based.
In the U.S., Home Depot’s net income rose 13 per cent in its fiscal second quarter to US$1.53 billion, or $1.01 per share. The results topped the 97 cents per share expected by analysts polled by FactSet.
Revenue climbed to $20.57 billion from $20.23 billion, up two per cent. Wall Street expected higher revenue of $20.74 billion but its shares climbed 3.58 per cent to US$54.71.
Groupon plummeted 27 per cent to US$5.51. The online coupon company’s stock had earlier fallen to an all-time low of US$5.46 after its sales growth fell short of expectations partly due to worsening conditions in Europe.