Financial issues led the gains Thursday on Canada's benchmark index after Germany voted to expand the eurozone bailout fund and some U.S. economic news came in better than expected.
"Some decent market traction was garnered off of a better-than-expected German employment report, the EFSF (European Financial Stability Facility), and a final look at U.S. Q2 GDP that saw a bigger than expected revision (1.3% versus consensus at 1.2%)," wrote Stewart Hall, senior fixed income and currency strategist at RBC Capital Markets.
"Hardly the stuff of legend but a complementary mix of factors (consumer spending and net trade revised higher) provided enough of a pig's ear to make a little silk purse. At the very least, it seemed sufficient to steer the market away from some rather troubling comments out of (U.S.Federal Reserve chair Ben) Bernanke including the characterization of monetary policy as no panacea, and unemployment as a national crisis."
Germany passed a motion on Thursday calling for a strengthening of the EFSF, which is seen as clearing the way for European officials to take steps to contain eurozone debt contagion.
"This, combined with the decisive ratification in Finland (Wednesday) indicates that European leaders have the political support to drive ahead with the more de-cisive measures needed to bring an end to this crisis of confidence," wrote analyst Colin Cieszynski of CMC Markets.
Meanwhile, better-than-expected data from the U.S. also eased concern about a slowdown in the world's largest economy - "and the general mood is so pessimistic it's not going to take much for there to be a rally in this market," Terry Shaunessy, president of Shaunessy Investment Counsel in Calgary, told Bloomberg.
In Toronto, the benchmark S&P/TSX composite index rose 100.45 points, or 0.87%, to 11,686.32. Seven of the sub-indexes advanced, led by financials which gained 1.72%.
The junior Venture exchange fell 20.46 points, or 1.36%, to 1,482.22.
The price of crude oil rose US93¢ to US$82.14 a barrel, while gold edged down by US80¢ to close at US$1,617.30 an ounce.
The Canadian dollar dropped a further 37 basis points to US96.47¢ as risk-averse investors put their money into the U.S. greenback.
"We strengthened a little bit off the U.S. numbers that were better than expected, but that was short-lived because the greater concern is what's going on in Europe, and that's going to weigh on the Canadian dollar," John Curran, senior vice-president at the online foreign exchange dealer CanadianForex Ltd., told Bloomberg.
