TORONTO - The Toronto stock market closed higher Thursday as oil prices and energy shares advanced in the wake of a report showing lower crude inventories in the United States.

Trading was cautious, however, ahead of Friday's release of key U.S. employment data.

The S&P/TSX composite index moved 31.2 points higher to 11,811.87, while the TSX Venture Exchange dipped 0.18 of a point to 1,483.93.

The Canadian dollar was down 0.26 of a cent at 96.04 cents US.

Stock markets in Toronto and New York were held aloft early in the session by key reports from the U.S. jobs market, service industry and manufacturing sectors, even as some missed forecasts.

Payroll company ADP reported that private employers added 55,000 jobs in May, about 5,000 short of expectations. That compares with 32,000 jobs added in April. The report comes a day ahead of the U.S. Labour Department's key jobs data. ADP data is often considered a barometer for the strength of the government's report.

"Tomorrow is going to be the deciding day," said Luciano Orengo, portfolio manager at MFC Global Investment Management.

"The market is expecting 515,000 jobs added and that would be the highest since 1983," Orengo said. "It's a pretty high hurdle. If they can get over that, I think it will set a positive tone for tomorrow and probably next week."

Canadian employment data for May is also being released on Friday.

The energy sector was up 1.76 per cent as the July crude contract on the New York Mercantile Exchange was up $1.75 at US$74.61 a barrel after the U.S. Department of Energy reported a decline of 1.9 million barrels in the U.S. oil supply last week.

EnCana Corp. (TSX:ECA) rose $1.04 to C$34.94 while Canadian Natural Resources (TSX:CNQ) advanced $1.08 to C$37.76.

The TSX industrials sector was a main support, up almost one per cent with Canadian Pacific Railway (TSX:CP) ahead $1.46 at $59.62, while Bombardier Inc. (TSX:BBD.B) gained six cents to $4.89.

The TSX base metals sector fell 1.42 per cent with the July copper contract in New York down nine cents at US$2.95 a pound.

The sector has tumbled about 24 per cent from its 2010 high on April 9, while copper prices have plunged 19 per cent on worries about falling demand from Europe as economies shrink amid moves to sharply drive down government deficits and debt. Meantime, demand from China has also dropped off sharply as Beijing moves to cool off a red-hot economy.

Teck Resources (TSX:TCK.B) declined 94 cents to C$35.12 while HudBay Minerals (TSX:HBM) was down 44 cents at C$11.50.

Gold stocks were also weak with the August gold contract on the Nymex down $12.60 to US$1,210 an ounce. Goldcorp Inc. (TSX:G) faded $1.02 to C$44.89 while Barrick Gold Corp. (TSX:ABX) shed 73 cents to C$44.09.

The slight advances followed a jump of about 200 points Wednesday for the TSX and the Dow Jones industrial average, sparked in large part by an upbeat report on U.S. pending home sales, which had raised hopes that the housing market might be turning around.

But on Thursday advances on New York markets were mainly weak as U.S. retailers reported tepid business in May amid cool weather and fresh concerns about the economy. The reports follow a lacklustre April and underscored how fragile the economic recovery remains.

Department store chain Stage Stores Inc. and teen merchant Wet Seal Inc. both reported declines in revenue at stores open at least a year, while Costco Wholesale Corp. reported a gain slightly below Wall Street expectations.

The Dow Jones industrial average was 5.74 points higher at 10,255.8.

The Nasdaq composite index gained 21.96 points to 2,303.03 as the tech sector got a lift after Gartner Inc., a leading information technology research and advisory company, revised higher its 2010 forecast for worldwide chip sales to US$290 billion.

The S&P 500 index was up 4.45 points at 1,102.83.

Other U.S. data showed that initial claims for jobless benefits fell to 453,000 last week. Economists had been forecasting claims would fall to 450,000.

A key report on the service sector continued to show growth. The Institute for Supply Management's service sector index for May was unchanged from April at 55.4, slightly below the 55.6 reading that had been expected. Any reading above 50 indicates growth.

Another report showed that U.S. factory orders rose 1.5 per cent in April, slightly lower than the 1.8 per cent climb that had been expected, after climbing 1.1 per cent in March.

"Although there were shortfalls in expectations, they are still moving in the right direction," Orengo said. "I think people are sort of being reminded again that things are not all that negative."

In other corporate news, British-Swiss mining company Xstrata PLC said it is halting investment in two projects in Australia because of the government's proposed new tax on mining profits. The company has operations around the world, including Canada, where it is a major nickel producer.

Xstrata's decision to axe investments worth US$496 million deepens a backlash from the industry in reaction to the government's plans to introduce a new 40 per cent "Resource Super Profits Tax," or RSPT, beginning in 2012.

At the same time, the proposed mining tax in Australia could actually benefit Teck Resources Ltd. if coking coal producers in that country scale back production and push prices higher, said Teck president and CEO Don Lindsay.

The Canada Pension Plan Investment Board is opposing auto parts giant Magna International's new share structure plan, calling it unfair for regular investors. The CPPIB owns about one per cent, or one million shares of Magna (TSX:MG.A) and it said it will vote against Magna's proposal announced in May to give common shareholders the option to do away with the Stronach family's absolute control over the company. Magna shares were up $1.04 at $72.90.

Canadian Western Bank (TSX:CWB) shares climbed 64 cents to $24.13 after it said second-quarter net income rose 76 per cent to $37.9 million, or 47 cents per share, from $21.6 million or 30 cents per share. Revenues increased to $111 million from $75.4 million.

WestJet Airlines Ltd. (TSX:WJA) shares rose 36 cents to $12.35 as the carrier said that it flew fuller planes in May as passenger traffic increased by 19 per cent over the same month last year and it carried 125,000 more guests than a year ago. The airline's load factor -- which is a measure of how full its fleet was -- rose 3.6 percentage points to 77.7 per cent.

Biovail Corp. (TSX:BVF) shares were ahead 15 cents to $15.52 after the drug company agreed to pay up to US$65 million plus royalties in return for the U.S. and Canadian rights to a new drug treatment for Parkinson's disease, a potentially debilitating neurological disorder.