TORONTO - The Toronto stock market closed higher Friday thanks to a rally in energy and financial stocks as investors reacted to better than expected August employment reports in Canada and the United States.

The S&P/TSX composite index closed up 95.98 points to 11,017.47 for a gain of 39 points this past week at the end of a volatile week when investors dealt with worries about the pace of an economic recovery.

Statistics Canada said that the Canadian economy added 27,100 jobs in August, much better than the loss of 22,000 jobs that economists had expected.

The suggestion the Canadian economy is emerging from recession set the Canadian dollar ahead 1.38 cents to 92.02 cents U.S.

"We had a very good rally in the dollar for the last six months or so," said Blair Falconer, portfolio manager at HSBC Securities, noting that the loonie also gained against the euro and the British pound.

"But the fact that employment in Canada has done well seems to be getting us back on that bullish track for the dollar."

The Canadian unemployment rate edged up a tenth of a point to 8.7 per cent, below expectations of a rise to 8.8 per cent, as more people entered the workforce.

But on the downside, all of the Canadian job gains were in services and part-time positions, as full-time jobs fell by 3,500.

"This report may not quite carry the good housekeeping seal of approval for the recovery, but it certainly is another big step in the right direction," commented Doug Porter, BMO Capital Markets deputy chief economist.

"While we can quibble about the details, the broader picture here is that the labour market is stabilizing, and apparently much faster than in the U.S."

The TSX Venture Exchange was up 13.74 points to 1,229.25.

The U.S. economy lost 216,000 jobs last month against estimates of around 225,000, while the unemployment rate ticked two tenths of a point higher to 9.7 per cent -- the highest rate since June 1983.

The mixed U.S. labour report contained enough kernels of hope to send stocks higher in light trading.

The Dow Jones industrial average was 96.66 points higher at 9,441.27 as the non-farm payrolls report also showed revisions for June and July to show the loss of an additional 49,000 jobs. The blue chip index fell 102.93 points or 1.07 per cent this week.

"Since consumer confidence tends to be driven more by unemployment headlines, I can't see this as being good for sentiment or spending," said Andrew Pyle, investment adviser with Scotia McLeod in Peterborough, Ont.

The Nasdaq composite index moved up 35.58 points to 2,018.78, while the S&P 500 index added 13.16 points to 1,016.4.

Other economic data released this week has been positive.

Statistics Canada announced Monday the Canadian economy grew in June after almost a year of contraction, rising 0.1 per cent.

In the U.S., the Institute for Supply Management, a trade group, said Tuesday that the manufacturing sector grew in August for the first time in 19 months. On Thursday, the ISM said its service sector index rose to 48.4 last month, the highest level in nearly a year. Home sales, meanwhile, have increased for several months and prices are stabilizing.

The financial sector was the major TSX advancer, up 1.3 per cent with TD Bank (TSX:TD) ahead $1.25 to $67.20.

The energy sector shook off early losses to rise 1.53 per cent as the October crude contract on the New York Mercantile Exchange inched up six cents to US$68.02 a barrel. But oil lost 6.5 per cent this past week on demand concerns. Canadian Natural Resources (TSX:CNQ) advanced $1.14 to $63.51.

Suncor Energy Inc. (TSX:SU) shares were ahead 95 cents at $34 after it said Thursday it expects to shed 1,000 workers as a result of last month's union with Petro-Canada. All staff affected by the move are expected to be gone by mid-October through a combination of layoffs, retirements and terminated contract positions.

Shares in Petro Andina Resources Inc. (TSX:PAR) spiked nearly 11 per cent a day after it announced it had inked a friendly takeover deal with Dutch firm Pluspetrol Resources Corp. N.V. in a deal worth about $500 million. The stock rose 99 cents to $10.42.

The TSX gold sector was the major decliner, down 1.18 per cent after charging ahead about 15 per cent in the past two sessions as gold prices ran ahead on worries about inflation arising from the huge amount of government stimulus that has been used to combat a severe global recession.

The December bullion contract slipped $1 to US$996.70 after closing at a six-month high Thursday. Goldcorp Inc. (TSX:G) fell 73 cents to $44.95.

South Africa-based Gold Fields Ltd. (NYSE:GFI) has disposed of its minority stake in Vancouver-based Eldorado Gold Corp. (TSX:ELD) for the equivalent of C$323 million or $11.61 per share. Eldorado shares were down eight cents to $12.22 on the TSX Friday. The Gold Fields stake represented about seven per cent of Eldorado's outstanding shares.

The base metals sector was up 0.54 per cent as December copper edged up 0.15 of a cent at US$2.865 a pound. Teck Resources (TSX:TCK.B) was ahead 35 cents to $26.50.