TORONTO - The Toronto stock market closed higher Tuesday following indications of an improving American economy.

The S&P/TSX composite index advanced 73.26 points to 11,627.98 as U.S. home resales surged to the highest level in nearly three years in November.

"Right now it appears that investors are just also sort of raising their expectations for global growth, that's helping commodities, tending to help everything," said Kate Warne, Canadian market specialist at Edward Jones in St. Louis.

"So it's the good news out of the U.S. but it's the general feeling where everyone has decided the world looks somewhat better."

The Canadian dollar rose 0.31 of a cent to 94.53 cents U.S.

The base metals sector was up 0.85 per cent with March copper declining two cents to US$3.14 a pound. HudBay Minerals (TSX:HBM) advanced 28 cents to $12.84.

The TSX energy sector was up 0.71 per cent as the OPEC cartel said it is holding its output quotas unchanged. The February crude contract in New York climbed 68 cents to US$74.40 a barrel. Suncor Inc. (TSX:SU) was ahead 71 cents to $36.50.

The tech sector was a drag with market heavyweight Research In Motion (TSX:RIM) $2.67 lower to $71.21. The stock surged more than 10 per cent last week in the wake of an earnings report that blew past expectations.

New York indexes chalked up a solid advance on the housing data with the Dow Jones industrial average closing up 50.79 points to 10,464.93, the Nasdaq composite index was ahead 15.01 points to 2,252.67. The S&P 500 index rose 3.97 points to 1,118.02.

The U.S. National Association of Realtors says sales rose 7.4 per cent to a seasonally adjusted annual rate of 6.54 million in November, from a downwardly revised pace of 6.09 million in October.

The U.S. Commerce Department reported that the economy grew at a 2.2 per cent pace in the third quarter, slower than the 2.8 per cent growth rate estimated just a month ago. However, all signs suggest the economy will end the year on stronger footing.

The TSX Venture Exchange dipped 6.2 points to 1,421.97.

The Toronto financial sector was ahead 0.72 per cent a day after regulators approved $138.8 million in settlements which banks will pay for their role in the asset-backed commercial paper meltdown.

The ABCP settlement deal will see National Bank (TSX:NA) paying the majority, with its share totalling $75 million in penalties and investigation costs.

Several other banks, including CIBC (TSX:CM), HSBC and Laurentian Bank (TSX:LB), will make up the rest. National Bank shares fell $1.79 to $60.03 while CIBC (TSX:CM) gained 19 cents to $68.70. Royal Bank (TSX:RY) gained 76 cents to $56.55.

The gold sector was slightly higher as February gold on the New York Mercantile Exchange dropped $9.30 to US$1,086.70 an ounce.

Investors also took in a legal defeat for Microsoft Corp. (NASDAQ:MSFT). A U.S. federal appeals court has upheld a US$290-million judgement against the software giant in a patent case launched by Toronto-based i4i Inc. It also issued an injunction that will prevent the sale of some versions of its popular Word software. Microsoft shares were 29 cents higher to US$30.81.

Trading is expected to be light throughout the holiday-shortened week, which can exaggerate price swings. Markets close early on Christmas Eve and are closed Friday for Christmas.

"Assuming that there is no news, it will be a quiet few days," said Warne, adding she expects very little movement between now and the end of the year.

But she cautioned that "if there's anything that is a surprise you'll see a quite volatile market for the same reason -- it is low volume and second, anything that leads everybody to be on the same side will actually move shares quite dramatically."

In corporate news, Parkland Income Fund (TSX:PKI.UN) says it will become the largest independent petroleum distributor in Canada with the $214-million purchase of Bluewave Energy Limited Partnership, a privately held company based in Dartmouth, N.S. Parkland units gained 16 cents to $12.74.

Ballard Power Systems (TSX:BLD) expects to book a $34-million gain in its fourth-quarter results by cashing in on its 19.9 per cent equity interest in Automotive Fuel Cell Co-operation Corp. (AFCC). Ballard shares were down four cents to $1.93.