Mining stocks led the way to a strong showing on the Toronto stock market Friday amid general relief over a plan to lower eurozone borrowing costs.
The plan to buy up government bonds raised hopes that greater financial stability in Europe will help the region get out of its economic slump, hopefully hike demand for oil and metals and sent shares prices higher on the resource-intensive TSX.
The S&P/TSX composite index moved up 98.93 points to 12,238.67 amid vastly different employment pictures for Canada and the U.S.
A poor U.S. jobs report was expected to persuade the Federal Reserve to launch further stimulus while traders took in a better than expected Canadian employment report for August.
Rising commodities also helped push the Canadian dollar up 0.55 of a cent to 102.3 cents US as Statistics Canada said the economy created 34,300 jobs in August. That was much better than the approximately 10,000 new jobs that economists had expected.
The unemployment rate remained unchanged at 7.3 per cent
The TSX Venture Exchange climbed 12.42 points to 1,270.71.
U.S. markets were mixed after the Labour Department reported that only 96,000 jobs were created in August, less than the 125,000 that had been forecast. The jobless rate edged down to 8.1 per cent from 8.3 per cent but that was because of fewer people looking for work.
And to top it all off, it added that 41,000 fewer jobs had been created in June and July than previously reported.
\The poor showing raised hopes that the U.S. Federal Reserve would embark on another round of economic stimulus to help support the economic recovery.
Previous easing measures by the Fed have supported financial markets.
“Not only does this report fail to meet the Federal Reserve’s criteria for a substantial and sustainable strengthening in the pace of the economic recovery, it is downright dismal,” observed TD Bank senior economist James Marple.
“Sub-100,000 job growth is likely enough to convince the Federal Reserve to announce a further round of asset purchase at their meeting next week.”
The Fed’s intentions could become clearer next week when the central bank holds its next interest rate meeting.
The Dow Jones industrials was ahead 1.03 points to 13,293.03, while the Nasdaq composite index was off 0.08 of a point to 3,135.73, weighed down by a revenue warning from chip giant Intel.
The S&P 500 futures gained 3.81 points to 1,435.93.
North American markets were set to end the week higher in the wake of the ECB’s move Thursday to get a grip on the eurozone’s debt crisis.
The plan amounts to a commitment to buy unlimited amounts of short-term bonds from euro countries that request help. Ostensibly, the plan is meant to ease the financial pressures on Spain and Italy by giving them time to reduce debt and reform their economies.
The ECB had been under pressure to take action after Spain and Italy became the latest countries forced to pay yields in the seven per cent range on their benchmark 10-year bonds earlier this year, a level that raised worries that those countries could be forced to seek bailouts.
The ECB plan seemed to be working as Spain has seen its cost of borrowing fall since the announcement. The yield on Spain’s 10-year bond fell another 0.21 percentage point to 5.80 per cent on Friday, the first time it’s gone below six per cent since May.
Investors think Spain will make a formal request to tap the new program within weeks, which could ease the pressures in the eurozone’s fourth-largest economy.
TSX gains were led by a five per cent rise in the base metals sector as September copper ran ahead 10 cents to US$3.61 a pound. Teck Resources (TSX:TCK.B) gained $1.50 to C$28.53 while First Quantum Minerals (TSX:FM) jumped $1.72 to $21.69.
The gold sector rose over two per cent as bullion prices turned positive on the prospect the U.S. Federal Reserve will decide on another round of quantitative easing, which would see the central bank print more money to buy bonds. December gold was up $31.20 to US$1,736.80 an ounce and Barrick Gold Corp. (TSX:ABX) rose 90 cents to C$39.18 while Goldcorp Inc. (TSX:G) improved by $1.06 to $42.42.
The energy sector rose one per cent as the October crude contract on the New York Mercantile Exchange gave up early gains and slipped 82 cents to US$94.71 a barrel. Suncor Energy (TSX:SU) climbed 41 cents to C$32.26 while Cenovus Energy (TSX:CVE) rose 40 cents to $33.70.
European bourses advanced with London’s FTSE 100 index ahead 0.22 per cent while Frankfurt’s DAX and the Paris CAC 40 climbed 0.6 per cent.