The S&P/TSX composite index gained 139.31 points to 12,499.47, gaining 1.88 per cent this week, while the TSX Venture Exchange was up 15.22 points to 1,318.11.
The Canadian dollar moved off the highs of the morning amid soft manufacturing data while traders took some profits from a sharp runup over the last week. The loonie was off 0.3 of a cent to 102.97 cents US, which is still a 12-month high. It had earlier been up about half a U.S. cent as the American dollar weakened.
The loonie surged more than two cents over the past seven sessions as the European Central Bank announced a plan to purchase government bonds in order to keep eurozone borrowing costs under control and speculation mounted the Fed would act to support a slowing economy — as it did on Thursday.
U.S. indexes were higher a day after the Fed delivered on those expectations when it announced it will spend US$40 billion a month on a new round of bond purchases and will continue to do so until the job market shows substantial improvement.
"The one element of this that I wasn’t sure they would go ahead with was making this open-ended," said Bob Gorman, chief portfolio strategist at TD Waterhouse.
"And what it also does is remove the question of what will they do next — they’re telling you, OK, this is in place 'til the cows come home or unemployment hits seven per cent, (currently over eight per cent) whichever comes first pretty much."
The money will be spent on mortgage-backed securities to keep interest rates low, encourage lending and support the slow recovery of the housing sector.
The Dow Jones industrials closed well off session highs, but still up 53.51 points to 13,593.37.
The Nasdaq composite index advanced 28.12 points to 3,183.95, while the S&P 500 index gained 5.78 points to 1,465.77.
The Fed has been under pressure to act because the U.S. economy is still growing too slowly to reduce high unemployment. Data for August released a week ago showed the economy unable to meet even modest expectations for job creation with employers adding just 96,000 positions.
Meanwhile, new data suggested that American consumers remain pessimistic. The Commerce Department reported Friday that retail sales increased in August to a seasonally adjusted 0.9 per cent, but that’s largely due to higher gasoline prices.
There were also soft industrial data from the U.S. and Canada.
U.S. industrial production fell 1.2 per cent in August, the biggest monthly drop in more than three years.
And Statistics Canada reported that manufacturing sales fell 1.5 per cent to $48.3 billion in July, the third decrease in five months. Declines in production of transportation equipment, including aerospace products and motor vehicles, were largely responsible for the overall drop.
Commodities rose sharply as the Fed program raised demand prospects for riskier assets such as oil and metals.
"Everything here is betting on risk-on trades continuing to work," added Gorman.
The base metals sector led advancers, up almost four per cent as the rally in copper prices continued with the December contract up 12 cents to US$3.83 a pound. Copper, viewed as an economic barometer because it is used in so many industries, has surged 19 cents this past week. Teck Resources (TSX:TCK.B) rose $1.58 to $33.02 while First Quantum Minerals (TSX:FM) gained 33 cents to $23.11.
Railroads advanced alongside commodity stocks with Canadian Pacific Railway (TSX:CP) up $2.06 to $85.22.
Bullion was ahead 60 cents to US$1,772.70 an ounce following a jump of almost $40 on Thursday as the Fed program raised inflation concerns. The TSX gold sector gained about 2.7 per cent and Barrick Gold Corp. (TSX:ABX) climbed 87 cents to $41.19 and Goldcorp Inc. (TSX:G) was 91 cents higher to $44.91.
Geopolitical worries also drove oil prices higher as a wave of anti-American protests in the Mideast raised supply concerns.
Protesters stormed the U.S. Embassy compound in Yemen’s capital Thursday. Ongoing clashes have been taking place around the U.S. mission in Cairo, and the U.S. ambassador to Libya was killed Tuesday.
The October crude contract on the New York Mercantile Exchange gained 69 cents to US$99, pushing the energy sector up two per cent. Suncor Energy improved by $1.14 to $34.32 while Canadian Natural Resources (TSX:CNQ) improved by 85 cents to $33.67.
Financials rose almost one per cent with Manulife Financial (TSX:MFC) ahead 50 cents to $12.64.
Telecoms led decliners with Telus (TSX:T) down 97 cents to $60.73.
In corporate news, Talisman Energy Inc., (TSX:TLM) which switched CEOs earlier this week, plans to wind down its operations in Peru. It says that despite the company’s success in finding light oil in a property called Block 64, it was unable to build a big enough position there. Talisman shares gained 59 cents to $14.57.
Manitoba Telecom Services Inc. (TSX:MBT) said Thursday it is launching a strategic review of its Allstream business division, opening up the possibility of a sale of the business. The company said recent changes by Ottawa to allow increased foreign investment in smaller telecoms have created an opportunity to consider a full range of alternatives.
Allstream provides Internet Protocol services such as voice and data to businesses in Canada and parts of the United States and has said growth in the division will be led by such services. MTS shares gained 30 cents to $33.88.