TORONTO - The Toronto stock market closed sharply higher Wednesday on rising energy and financial stocks after three down days on the markets.

New York also made headway after a dismal read of economic conditions by the U.S. Federal Reserve, a buyout deal in the homebuilding industry and a disappointing start to the U.S. corporate earnings season.

Toronto's S&P/TSX composite index surged 144.53 points to 8,969.28.

The TSX Venture Exchange was off 1.78 points to 950.7 while the Canadian dollar rose 0.03 of a cent to 80.82 cents U.S. as Canada Mortgage and Housing Corp. reported that the seasonally adjusted annual rate of housing starts increased to 154,700 units in March from 136,100 units in February.

CMHC attributed the increase to higher multiple starts in Ontario and Quebec.

New York's Dow Jones industrials gained 47.55 points to 7,837.11 as the release of the minutes from the latest Fed meeting last month showed the central bank viewed downside risks as the biggest worry in the near term.

Projections for economic activity in the second half of 2009 and in 2010 "were revised down" by the Fed's staff, according to the minutes. It did not provide updated forecasts.

Despite missing analyst expectations, shares of Alcoa, the first Dow component to report earnings, rallied towards the end of the session and rose 27 cents to US$8.06.

Alcoa lost US$497 million, as the stumbling global economy continued to erode prices.

The Nasdaq composite index moved 29.05 points higher to 1,590.66 and the S&P 500 index rose 9.61 points to 825.16.

Worries about companies' first-quarter earnings reports, and their forecasts for the remainder of the year, have rattled the market this week, giving most major indexes extended losses after four straight weeks of massive gains.

However, the rally has so far boosted the TSX about 18 per cent and the Dow 20 per cent.

"We have seen a very nice rally," said Paul Vaillancourt, director of asset allocation at Franklin Templeton Managed Investment Solutions in Calgary.

"I certainly don't think we are immediately on the road to recovery, I think you need to see stability and stabilization of the economic and financial indicators."

There was some positive news from the housing industry as Pulte Homes Inc. said Wednesday it has agreed to buy rival Centex Corp. for US$1.3 billion.

The all-stock deal will create the United States' largest homebuilding company and suggests that deals are still possible even in one of the economy's more troubled industries. Pulte shares fell $1.13 to US$9.64 while Centex shares ran up $1.44 to US$9.06.

The TSX financial sector was up 1.3 per cent after the Wall Street Journal said that the U.S. government may soon provide rescue funds to the ailing insurance sector.

In New York, Prudential Financial Corp. gained $1.71 to US$23.81.

On the TSX, Manulife Financial Corp. (TSX:MFC) advanced 31 cents to $16.47 while Sun Life Financial (TSX:SLF) climbed $1.25 to $25.

The TSX energy sector shook off early losses, rising three per cent after crude inventories rose less than analysts forecast last week, climbing by 1.7 million barrels, against an expected increase of 2.3 million barrels.

The data sent the May crude contract on the New York Mercantile Exchange sharply, but by the close was only up 23 cents to US$49.38 a barrel after going as high as US$51.30. Suncor Inc. (TSX:SU) gained $1.32 to C$30.50 and Canadian Natural Resources (TSX:CNQ) was up $1.55 to $53.02.

The tech group supported the TSX, rising three per cent as Research In Motion Ltd. (TSX:RIM) advanced $2.94 to $76.95.

Base metal stocks also buoyed the TSX. Teck Cominco Ltd. (TSX:TCK.B) shares rose 78 cents or almost 10 per cent to $8.75 after it said it has sold about 5.6 million common shares of Kinross Gold Corp. (TSX:K), raising about US$101 million for the debt-plagued Vancouver mining giant.

The gold sector was flat as the June bullion contract in New York up $2.60 to US$885.90 an ounce.

Canadian investors also took in earnings reports from the retail and media sectors.

The Forzani Group Ltd. (TSX:FGL), owner of chains such as Athletes World, reported profit of $24.2 million for the quarter ended Feb. 1, down from $28.7 million a year earlier amid slumping sales. But its shares advanced 16 cents to $9.45.

Shares in clothing retailer Reitmans (Canada) Ltd. (TSX:RET.A) fell $1.51 or 13 per cent to $9.99 as fourth-quarter net earnings plummeted 75.8 per cent to $9 million on Quebec income tax reassessments. Sales slid 2.9 per cent to $261.8 million.

Cable provider Shaw Communications Inc. (TSX:SJR.B) says its second-quarter profit fell to $156 million from a year-earlier $113 million, but revenues improved 10 per cent.

Shaw the lower earnings were due to a variance in the amount of tax recovery it received in the comparable quarters and its shares climbed 14 cents to $19.45.

Corus Entertainment Inc. (TSX:CJR.B) said Wednesday its quarterly net profit came in at $29 million, a drop from net income of $35.4 million during the same quarter the year before. Its shares were ahead 43 cents to $14.26.