By Malcolm Morrison, The Canadian Press – 18 minutes ago TORONTO — The Toronto stock market was slightly higher Tuesday as commodity prices gained ground but investors were cautious amid a fresh flareup of worry over the European debt crisis. The S&P/TSX composite index was up 18.25 points to 13,670.52 while the TSX Venture Exchange climbed 5.86 points to 2,037.3. The Canadian dollar weakened against the greenback, down half of a cent from Friday's close to 102.27 cents US. The TSX was closed Monday for the Victoria Day holiday and escaped the losses that piled up on stock markets around the globe after Standard and Poor's lowered its outlook on Italy’s A-plus sovereign-credit rating from stable to negative last Friday. The ratings agency cited potential political gridlock that could derail the government’s plan to balance its budget by 2014. In addition, investors were also uneasy over the political will in Spain to carry on with austerity measures after the ruling Socialist party sustained severe losses in regional elections during the weekend. But the main concern centres on whether Greece will restructure its debt, a scenario which ratings agency Moody’s said would constitute a default, which could badly hit the other debt-laden euro countries. Commodity prices had also suffered Monday as investors flocked to the save haven of U.S. Treasurys but were higher Tuesday, helped along by word from Goldman Sachs Group Inc. that it is turning "more bullish" on raw materials. Goldman Sachs suggested buying oil, copper and zinc, reversing last month’s call to sell commodities. The July crude contract on the New York Mercantile Exchange gained $1.96 to US$99.66 a barrel. The energy sector was slightly higher with Canadian Natural Resources (TSX:CNQ) up 28 cents to C$41.16 while Cenovus Energy (TSX:CVE) shed 30 cents to $34.27. Metal prices also advanced with the July copper contract on the Nymex ahead six cents to US$4.05. The base metals sector was down 0.66 per cent. Teck Resources (TSX:TCK.B) declined 52 cents to C$48.17 and First Quantum (TSX:FM) was down $1.38 to $131.50. Financials were also lower as Manulife Financial (TSX:MFC) gave back 40 cents to $17.11 while Sun Life Financial (TSX:SLF) was down 42 cents to $29.81 The gold sector was the strongest group, ahead 1.65 per cent as nervous investors pushed the June gold contract in New York up $11.60 to US$1,527 an ounce. Barrick Gold Corp. (TSX:ABX) advanced $1.12 to C$45.50 and Goldcorp Inc. (TSX:G) was ahead 85 cents to $48.35. New York markets were higher with the Dow Jones industrial average ahead 33.15 points to 12,414.41. The Nasdaq composite index was up 6.18 points to 2,765.08 while the S&P 500 index rose 5.65 points to 1,323.02. On the economic front, the U.S. Commerce Department said new-home sales rose 7.3 per cent last month to a seasonally adjusted annual rate of 323,000 homes. It is the second straight monthly gain. However, a normal housing market would mean a pace of about 700,000 new-home sales a month. In corporate news, Valeant Pharmaceuticals International Inc. (TSX:VRX) will acquire Lithuania-based pharma company AB Sanitas for C$432.6 million (euro314 million) in cash. Its shares gained $1 to $49.32. TMX Group (TSX:X) shares were down 55 cents to $43.51 after its board of directors rejected a $3.6-billion takeover proposal from a Canadian consortium of banks and pension plans. The operator of the Toronto stock exchange said Friday the bid breeds too many uncertainties, including regulatory and debt risks. It added that the bid is not superior to its proposed merger with the London Stock Exchange Group. Kirkland Lake Gold Inc. (TSX:KGI) said Monday it has recorded its highest level of gold production for its final month and quarter of fiscal 2011 and also for the full year. The junior gold miner said its Ontario mine produced 10,175 ounces in April, the first time it has produced more than 10,000 ounces in a single month. Production for the quarter was 23,466 ounces and for all of 2011, 81,860 ounces. Its shares gained seven cents to $14.17. Niko Resources Ltd. (TSX:NKO) has reached an agreement with Indonesia’s Statoil ASA in which Statoil, through its subsidiaries, will take part in a joint venture program for deep water drilling next year in that country. Statoil will earn a 40 per cent working interest in each of the three projects of the program that Niko will operate. Niko shares gained 86 cents to $73.95. Earlier, a choppy day of trading in Asia ended with key benchmarks higher. Japan’s Nikkei 225 rose 0.2 per cent while Hong Kong’s Hang Seng ended marginally higher. South Korea’s Kospi rose 0.3 per cent but Australia’s S&P/ASX 200 lost 0.3 per cent with some mining shares hit by worries that a slowdown in Chinese manufacturing would lead to falling demand for commodities. HSBC’s preliminary purchasing managers' index eased to 51.1 from 51.8 in April. The data released Monday is designed to give investors a glimpse of what the broader PMI survey will show next week. Mainland Chinese shares were mixed as weak economic indicators and pessimistic forecasts for the near-term outlook weighed on sentiment. The benchmark Shanghai Composite Index lost 0.3 per cent , the lowest close in four months, while the Shenzhen Composite Index of China gained 0.1 per cent. European markets also advanced with London's FTSE 100 index up 0.79 per cent, Frankfurt's DAX gained 1.03 per cent while the Paris CAC 40 rose 0.58 per cent. Copyright © 2011 The Canadian Press. All rights reserved.

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