TORONTO - The Toronto stock market closed with a solid advance Friday after a better than expected reading on U.S. orders for big ticket manufactured goods raised hopes of higher demand for oil and metals.
The resource-heavy S&P/TSX composite index gained 103.07 points to 12,204.86, while the TSX Venture Exchange rose 11.52 points to 1,699.55. A weaker U.S. dollar helped send the Canadian dollar up 0.79 of a cent to 97.5 cents US.
The U.S. Commerce Department said orders for durable goods dropped 1.3 per cent last month, reflecting a huge drop in aircraft demand.
But when looking at orders without aircraft and autos, demand actually rose two per cent, double the expected increase of one per cent and reflecting strong gains in primary metals such as steel, along with heavy machinery and computers.
"We're at that in-between mid-cycle in terms of a recovery...the transition between government-led stimulus to the private sector picking up core demand and that's exactly the fulcrum point where we are at," said Chris King, portfolio manager at Morgan, Meighen and Associates.
"It won't all be straight up but this market will grind higher."
Investors looked past other data which showed that new home sales in August in the U.S. were the second slowest on record.
The Commerce Department says last month's new home sales were unchanged from a month earlier at a seasonally adjusted annual pace of 288,000. Sales were down by 29 per cent from the same month a year earlier.
The base metals sector led advancers, up 4.27 per cent as December copper in New York was ahead three cents to US$3.62 a pound. Teck Resources (TSX:TCK.B) rose $1.25 to C$40.35 and Quadra FNX Mining (TSX:QUX) climbed $1.04 to C$14.80.
However, gold stocks were lower even as bullion prices moved further into record territory, briefly passing the US$1,300-an-ounce level as investors look for a safe haven and protection from a weakening greenback.
The December bullion contact on the Nymex gained US$1.80 to a record high close of US$1,298.10 an ounce. Bullion earlier hit a record intra-day high of US$1,301.60. Barrick Gold Corp. (TSX:ABX) lost 78 cents to C$47.45 while Kinross Gold Corp. (TSX:K) faded 22 cents to C$19.43.
Oil prices moved above US$76 a barrel in the wake of the U.S. durable goods data.
The benchmark crude for November delivery was up $1.31 to US$76.49 a barrel on the New York Mercantile Exchange and the energy sector was ahead 1.08 per cent. On the TSX, Canadian Natural Resources (TSX:CNQ) climbed 79 cents to C$33.90 and Cenovus Energy Inc. (TSX:CVE) rose 52 cents to C$28.74.
Prices also got a lift from an unexpected rise in German business confidence, which helped shore up sentiment amid ongoing concerns about the pace of the U.S. economic recovery.
German business confidence in September rose to its highest level since June 2007, according to the Ifo Institute. The reading came on the back of the country's impressive economic performance in the April-June quarter when Europe's biggest economy grew by a solid rate of 2.2 per cent.
The financial sector also provided lift, gaining 1.11 per cent with Manulife Financial (TSX:MFC) ahead 39 cents at $13.15 and Royal Bank (TSX:RY) up 89 cents at $53.49.
New York markets surged following the durable goods data with the Dow Jones industrials up 197.84 points at 10,860.26.
The Nasdaq composite index rose 54.14 points to 2,381.22 while the S&P 500 index gained 23.84 points to 1,148.67.
The TSX ended the week with a slight advance, up 40 points or 0.33 per cent amid gains in mining stocks and losses in the energy and financial sectors.
But Friday's durable goods report was largely responsible for the Dow industrials running ahead 252 points or 2.37 per cent for the week.
In corporate news, Nike Inc. said its fiscal first-quarter revenue and profit jumped. Just as importantly, the athletic shoe and apparel maker said upcoming orders rose by their largest level in a decade. Its shares climbed $1.82 to US$79.49.
Unitholders of Menu Foods Income Fund (TSX:MEW.UN) overwhelmingly approved a $239-million takeover offer from competitor Arkansas-based Simmons Pet Food Inc. Menu Foods units were off a penny at $4.75.
Mood Media Corp. (TSX:MM) will sell at least US$31.5 million worth of new convertible debt, which will be used to redeem outstanding debentures issued last November by the company then known as Fluid Music Canada. Its shares rose a dime to $1.70.
