TORONTO - The Toronto stock market closed in positive territory Friday after investors took in rising commodity prices and mixed Canadian economic data.

The S&P/TSX composite index added 60.33 points to 13,494.63, with the gold-heavy materials index leading the way higher. The TSX Venture exchange gained 20.55 points to 2,059.6.

The main index ended the week 195.09 points, or 1.46 per cent higher.

The Canadian dollar fell 0.42 of a cent to 105.36 cents US following a Statistics Canada report that said the annual inflation rate was 3.1 per cent in June, sliding from 3.7 per cent in May.

Markets had expected a 0.2 per cent decline from May or a 3.6 per cent year-over-year increase.

Excluding volatile food and energy prices, inflation rose 1.4 per cent from June 2010.

Food prices rose 4.8 per cent from a year ago and overall energy prices were 15.7 per cent higher than a year earlier. The price of gasoline was 28.5 per cent higher, although it actually dropped slightly compared with May.

Meanwhile, Statistics Canada also reported that retail sales rose unexpectedly by 0.1 per cent in May from the month before on the back of higher sales of garden equipment and building material.

The Bank of Canada signalled earlier this week that it may raise rates sooner rather than later, but Friday's inflation data removes some of the urgency to raise rates and curb inflation.

The central bank will also factor in external developments in its September decision, such as an agreement Thursday by European countries on the sovereign debt crisis aimed at staving off another global economic crisis, and expectations that U.S. policy-makers will be able to reach an agreement to raise the debt ceiling, said Dawn Desjardins, assistant chief economist at RBC Economics.

RBC now predicts that Canada's economy picked up steam in May with real GDP expected to increase by 0.2 per cent, followed by a similar increase in June. May GDP data comes out next week. RBC believes the central bank will increase interest rates by 0.25 per cent in September.

"This improved momentum in the growth numbers, in the absence of any external disturbance, will likely to be enough to prompt the Bank to restart its rate hike cycle," Desjardins said.

Oil prices added 74 cents at $99.87 a barrel on the New York Mercantile Exchange. Shares in Canadian Natural Resources (TSX:CNQ) added 18 cents to C$41.54.

Gold prices rose $14.50 to $1,601.50 per ounce. The materials index on the TSX was up 1.45 per cent with shares in Barrick Gold Corp. (TSX:ABX) up 1.6 per cent or 75 cents to $47.62. The September copper contract added two cents at $4.41 a pound. Shares in base metals miner Teck Resources Ltd. (TSX:TCK.B) were down 47 cents to $49.98.

Traders are still looking to American lawmakers to find a way to get the U.S. debt limit raised and avoid a debt default before an Aug. 2 deadline.

Wall Street markets were mixed with the Dow Jones industrial average down 43.25 points to 12,681.16, while the Nasdaq added 24.4 points to 2,858.83. The S&P index was up 1.22 points to 1,345.02.

The U.S. Senate cast away House Republicans' budget-cutting plan Friday.

President Barack Obama sought Friday to pressure House Republicans to come around to a deal that he insisted must include new taxes as well as unpalatable spending cuts with less than two weeks remaining to resolve the urgent issue of increasing the nation's borrowing powers and averting a potentially devastating government default.

At the same time, even with no clear end in sight to negotiations that have dragged on for weeks, the president asserted that the U.S. has never defaulted on its debt and won't do so now.

The uncertainty has overshadowed positive news about corporate earnings and an agreement Thursday to give Greece a second financial lifeline.

However, a leading ratings agency said Friday that Greece will be ruled in default on its debt obligations as a result of a new eurozone plan to ask investors to take losses on the loans to help put the country back on its feet. Many economists have been saying for months that it is unavoidable since Greece's debt burden is too big to pay and must somehow be reduced.

In Canadian corporate news, Precision Drilling Corp. (TSX:PD) recovered with a second-quarter profit of $16.4 million, above a loss of $69.4 million a year ago. Revenues grew 31.9 per cent to $345.3 million from $261.8 million. Shares gained 8.5 per cent or $1.30 cents to $16.69.

Celestica Inc. (TSX:CLS) says profits rose to $45.7 million, or 21 cents per share in the second quarter, compared to a profit of $13 million, or six cents a share, in the same period last year. Revenues rose to $1.83 billion from a year-earlier $1.59 billion. Its shares rose 10.5 per cent or 85 cents to $8.89.

TMX Group Inc. (TSX:X) shares gained 1.4 per cent or 61 cents to $44.51 after it announced late Thursday plans to hold formal discussions with Maple Group Acquisition Corp. The Maple Group has made a $3.7-billion takeover bid for the operator of the Toronto Stock Exchange. Its directors aren't making any recommendation to shareholders regarding Maple's offer, adding there is no guarantee that any agreement between the two sides will come out of the talks.