CP Rail grain train near Lake Louise, Alberta, c. 1995.The Canadian Press
The Toronto stock market ran ahead Friday as traders continued to react enthusiastically to an aggressive stimulus program from the U.S. Federal Reserve.
The S&P/TSX composite index gained 130.29 points to 12,490.45 while the TSX Venture Exchange was up 5.42 points to 1,308.31.
The Canadian dollar moved off the highs of the morning amid soft manufacturing data while traders took some profits from a sharp run-up over the last week. The loonie was off 0.01 of a cent to 103.26 cents U.S., which is still a 13-month high. It had earlier been up about half a U.S. cent as the American dollar weakened.
The loonie had surged well over 2 1/2 cents over the last week as the European Central Bank announced a plan to purchase government bonds in order to keep eurozone borrowing costs under control and speculation mounted the Fed would act to support a slowing economy.
U.S. indexes were also higher a day after the Fed delivered on those expectations as the central bank said it will spend $40-billion a month on a new round of bond purchases and will continue to do so until the job market shows substantial improvement.
The Dow Jones industrials were up 65.19 points to 13,605.05, the Nasdaq composite index advanced 21.35 points to 3,177.18, while the S&P 500 index gained 7.35 points to 1,467.34.
The Fed money will be spent on mortgage backed securities to keep interest rates low, encourage lending and support the slow recovery of the housing sector.
"The open-ended program and conditional promise to do more means the Fed's printing presses will be working overtime until the economy strengthens and the unemployment rate falls 'substantially'," said BMO Capital Markets senior economist Sal Guatieri.
"Few policy tools are off the table, including more asset purchases."
The Fed has been under pressure to act because the U.S. economy is still growing too slowly to reduce high unemployment. Data for August released a week ago showed the economy unable to meet even modest expectations for job creation with employers adding just 96,000 positions.
Meanwhile, new data suggested that American consumers remain pessimistic. The Commerce Department reported Friday that retail sales increased in August to a seasonally adjusted 0.9 per cent, but that's largely due to higher gasoline prices.
There were also soft industrial data from the U.S. and Canada.
U.S. industrial production fell 1.2 per cent in August, the biggest monthly drop in more than three years.
And Statistics Canada reported that manufacturing sales fell 1.5 per cent to $48.3-billion in July, the third decrease in five months. Declines in production of transportation equipment, including aerospace products and motor vehicles, were largely responsible for the overall drop.
Commodities rose sharply as the Fed program raised demand prospects for oil and metals.
The base metals sector led advancers, up 5.6 per cent as the rally in copper prices continued with the December contract up 11 cents to $3.82 a pound. Copper, viewed as an economic barometer because it is used in so many industries, has surged 18 cents this past week. Teck Resources rose $1.78 to $33.22.
Railroads rose alongside commodity stocks with Canadian Pacific Railway up 85 cents to $84.01.
Bullion was off 20 cents to $1,771.90 an ounce following a jump of almost $40 on Thursday as the Fed program raised inflation concerns. The TSX gold sector gained almost two per cent and Barrick Gold Corp. climbed 89 cents to $41.21.
Geopolitical worries also drove oil prices higher as a wave of anti-American protests in the Mideast raised supply concerns.
Protesters stormed the U.S. Embassy compound in Yemen's capital Thursday. Ongoing clashes have been taking place around the U.S. mission in Cairo, and the U.S. ambassador to Libya was killed Tuesday.
The October crude contract on the New York Mercantile Exchange gained 88 cents to $99.19, pushing the energy sector up 1.7 per cent. Suncor Energy improved by 83 cents to $34.01.
Financials rose 0.5 per cent with Manulife Financial ahead 26 cents to $12.40.
All sectors were positive save health care.
Talisman Energy Inc., which switched CEOs earlier this week, plans to wind down its operations in Peru. It says that despite the company's success in finding light oil in a property called Block 64, it was unable to build a big enough position there. Talisman shares gained 21 cents to $14.19.
Manitoba Telecom Services Inc. said Thursday it is launching a strategic review of its Allstream business division, opening up the possibility of a sale of the business. The company said recent changes by Ottawa to allow increased foreign investment in smaller telecoms have created an opportunity to consider a full range of alternatives.
Allstream provides Internet Protocol services such as voice and data to businesses in Canada and parts of the United States and has said growth in the division will be led by such services. MTS shares gained 47 cents to $34.05.
And U.S. health insurance company UnitedHealth Group is replacing Kraft Foods in the Dow Jones industrial average, the most widely known barometer of the American stock market. Kraft was added to the Dow in September 2008, when it replaced the crippled insurer AIG.