TORONTO - The Toronto stock market racked up a slight gain after the U.S. Federal Reserve delivered a relatively upbeat take on the economy while adding that a slow recovery means that interest rates will stay low for "an extended period."

The S&P/TSX composite index rose 30.4 points to 10,659.87 with most of the strength coming from the energy and financial sectors.

The market had lost about 250 points over the last two days while investors took profits and searched for fresh signs the U.S. economy is strengthening and pulling out of its recession.

The Fed, wrapping up a two-day meeting on rates, said it would keep its federal funds rate near zero and added that economic activity is "levelling out."

"I don't think you could have actually engineered a statement any better than what we saw today," said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.

"They talked about improving economic conditions, in other words, saying that we're not declining anymore, we're levelling off and that's another way of saying that the summer or third quarter is probably the time when we go from recession to recovery -- but they said it in such a way that they really weren't putting all their chips on the table."

The TSX energy sector was up one per cent as the September crude contract on the New York Mercantile Exchange climbed 71 cents to US$70.16 a barrel as the U.S. Energy Information Administration said oil placed into storage in the U.S. rose for the third straight week.

Suncor Inc. (TSX:SU) gained 95 cents to C$35.86 on the TSX.

Financials were also supportive, up 0.42 per cent.

Manulife Financial Corp. (TSX:MFC) is buying the Canadian retail investment fund business of AIC Ltd., a private company controlled by Michael Lee-Chin for an undisclosed price. Manulife shares rose 23 cents to $22.42.

The Canadian dollar was volatile for a second day, moving up 1.09 cents to 91.88 cents US, reversing Tuesday's slide of just over a cent.

The TSX Venture Exchange moved ahead 9.18 points to 1,186.02.

New York markets ran up sharply even as the central bank also signalled that it would soon end one of its programs aimed at propping up the economy.

The Fed said it would gradually slow the pace of its program to buy Treasury securities so that it will shut down at the end of October, versus September. The program is aimed at lowering rates on mortgages and other consumer debt, a move to spur Americans to spend more.

The Dow Jones industrials surged 120.16 points to 9,361.61.

The Nasdaq composite index gained 28.99 points to 1,998.72 while the S&P 500 index moved ahead 11.46 points to 1,005.81.

Also lifting U.S. markets was homebuilder Toll Brothers, which said three per cent more homebuyers signed contracts in its fiscal third quarter, the first annual increase in four years. Demand has been strong enough that the company has been able to reduce incentives to buyers. Toll shares ran up $2.94 to US$23.42.

Elsewhere on the TSX, the base metals sector was up 0.63 per cent as September copper charged ahead 8.7 cents at US$2.82.35 a pound. Teck Resources (TSX:TCK.B) gained $1 to $28.67.

Uranium miner Cameco Corp. (TSX:CCO) reported second-quarter net earnings of $247 million, up $97 million from the same period a year ago. Its shares lost 38 cents to $29.

BHP Billiton Ltd., the world's biggest mining company, reported a 62 per cent fall in annual profit, following a drop in metal prices and demand amid the global economic downturn. In New York, its shares rose $1.29 to US$63.20.

The industrials sector dipped 0.2 per cent but shares in flight training services provider CAE Inc. (TSX:CAE) closed 59 cents higher to $8.49 after it reported first-quarter profits came in at $27.2 million, down from $47.3 million a year earlier, due to a $18.9 million restructuring charge.

The gold sector declined 0.69 per cent as the December bullion contract moved ahead $4.90 to US$952.50 an ounce. Barrick Gold Corp. (TSX:G) declined 57 cents to $36.47.

Brookfield Asset Management (TSX:BAM.A) and Brookfield Properties (TSX:BPO) announced a plan after the markets closed Tuesday to form a $4-billion consortium with other institutional investors to buy under-performing real estate in several regions of the world. Brookfield Properties shares were up 31 cents to $11.60 while shares in Brookfield Asset Management improved 31 cents to $22.10.

In other earnings news, ATS Automation Tooling Systems Inc. (TSX:ATA) said Wednesday its profits plunged 98 per cent in the first quarter of fiscal 2010 to $300,000 as the global recession took its toll on the company's customers. Its shares fell back 40 cents to $4.48.

In economic news, Canada's international trade deficit narrowed to $55 million in June from $1.1 billion in May as exports rose 2.3 per cent to just under $29.3 billion while imports fell 1.3 per cent to just over $29.3 billion.

In the U.S., the trade deficit came in at US$27 billion, up from May's US$26 billion.