The S&P/TSX composite index was up 60.08 points to 12,628.85, led by gains in energy stocks and financials, as the Toronto market advanced for three of the past four sessions.
"(People are) looking at the economy and saying, there isn’t especially great news but there isn’t bad news either," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.
"And so you have seen the market start to pick up and it’s more broadbased then it was before."
The Canadian dollar was ahead 0.36 of a cent to 96.38 cents US. It slid almost half a U.S. cent Wednesday after the Bank of Canada said it was in no hurry to raise its key interest rate from one per cent, where it has been for almost three years.
U.S. indexes were higher and the Dow industrials and S&P 500 closed at record highs as investment bank Morgan Stanley beat expectations and a major manufacturing index came in much better than expected.
The Dow Jones industrials moved 78.02 points higher to 15,548.54, the Nasdaq was up 1.28 points to 3,611.28 and the S&P 500 index gained 8.46 points to 1,689.37.
The Philadelphia Fed's manufacturing survey in July surged to its highest level in more than three years, coming in at 19.8, up from 12.5 in June. The results were much higher than the reading of 10 that economists had expected.
Also, the New York-based Conference Board said it’s leading economic index was unchanged in June. It reported that the economy is seeing "positive but moderate" growth, and continued expansion is expected this year.
Meanwhile, Morgan Stanley earned $898 million after excluding the benefit of an accounting gain, a leap from $337 million a year earlier. Earnings ex-items were 45 cents a share, two cents better than expectations and its shares were ahead per cent 4.37 per cent.
"I've been strongly bullish on U.S. banks because of the housing market improving, the economy improving," added Adatia.
"We’ve seen extremely positive results from the U.S. banks. And that will impact Canadian banks positively."
On Thursday, advancers were led by a 1.34 per cent rise in the financials sector. Manulife Financial (TSX:MFC) was ahead 17 cents to $18.25 after hitting a new 52-week high of $18.36.
Two of Canada's biggest banks also racked up record highs.
Royal Bank (TSX:RY) was up 98 cents to $64.78, 29 cents above its previous high on Feb. 29.
TD Bank (TSX:TD) rose $1.32 to $87.48. Its previous record closing price was $86.40 on March 30, 2011.
The energy sector gained 0.76 per cent as benchmark crude for August delivery was up $1.56 at $108.04 a barrel on the New York Mercantile Exchange after gaining 48 cents on Wednesday.
Despite cooling economic growth in China, the price of oil was underpinned by another sizable decline in U.S. oil supplies. U.S. crude inventories fell by 6.9 million barrels last week, bringing the three-week decline to 27.1 million barrels. Canadian Natural Resources (TSX:CNQ) was up 55 cents to $33.92.
The consumer staples sector was up 0.41 per cent as food company Saputo (TSX:SAP) gained 48 cents to $49.23. Shoppers Drug Mart (TSX:SC) posted quarterly earnings of $147 million or 73 cents a share, one cent above a consensus estimate and its shares added six cents to $60.31. The Shoppers' board and management are supporting a $12.4-billion takeover offer from Loblaw (TSX:L), announced earlier this week.
The TSX also continued to benefit from traders buying up mining stocks that have been beaten up this year while commodity prices have suffered from a slow global economic recovery. Gold prices have sunk recently on speculation as to when the Fed might start to ease up on its bond purchases.
Copper prices shook off early losses and the September contract on the Nymex closed unchanged at US$3.13 a pound. The base metals sector edged 0.1 up per cent and First Quantum Minerals (TSX:FM) climbed 37 cents to C$16.25.
The gold sector led decliners, down about 0.64 per cent as August bullion gained $6.70 to US$1,284.20 an ounce. Goldcorp (TSX:G) faded 28 cents to C$27.34.
Elsewhere on the earnings front, Google Inc. delivered an earnings disappointment after the close. Second quarter earnings per share came in at $9.56 ex-items, lower than the $10.78 that analysts had forecast. Google handed in revenue of $14.11 billion versus expectations of $14.42 billion and its shares fell 4.47 per cent in after hours trading.
Microsoft’s earnings per share also missed expectations, coming in at 66 cents ex-items, nine cents below forecasts. Revenue was $19.9 billion, weaker than the $20.73 that was forecast and its shares fell 4.7 per cent in after hours trading.
Traders also took in a second day of congressional testimony from U.S. Federal Reserve chairman Ben Bernanke. He reiterated that the Fed's efforts to boost the U.S. economy remain tied to the job market’s health and inflation
Stocks also rose Wednesday after Bernanke said the Fed’s timetable for reducing its bond purchases was not decided and that the central bank could even boost them if the economy fails to meet expectations.
He said he wants to see substantial progress in the job market before scaling back its $85 billion a month in purchases of bonds.