The Toronto stock market was higher Thursday as resource stocks rose alongside prices for oil and metals.
The S&P/TSX composite index gained 53.71 points to 12,266.13 following three days of losses. Markets have been depressed by fresh signs of a slowing economic recovery, including another downward revision of global growth by the International Monetary Fund and forecasts of lower demand by resource giant Alcoa Inc.
The TSX Venture Exchange was 5.05 points higher at 1,307.2.
The Canadian dollar rose alongside commodity prices, up 0.32 of a cent to 102.29 cents US.
New York markets were also positive as a much better than expected read on U.S. jobless insurance claims raised hiring prospects. Traders also looked ahead to key earnings reports from U.S. banking giants, including JPMorgan Chase and Wells Fargo.
The Dow Jones industrials rose 42.36 points to 13,387.33 following two back-to-back, triple-digit slides. The Nasdaq composite index climbed 21.02 points to 3,072.8 while the S&P 500 index was up 7.76 points at 1,440.32.
The U.S. Labour Department said the number of people seeking unemployment aid plummeted last week by 30,000 to a seasonally adjusted 339,000, the lowest level in more than four years. The four-week average, a less volatile measure, dropped by 11,500 to 364,000, a six-month low.
Traders appeared to take in stride a move by Standard & Poor’s to cut its rating on Spain’s debt by two notches to BBB-minus, leaving the country on the verge of non-investment grade, or junk, status.
The Spanish government has so far refused to tap a new European Central Bank bond-buying facility that has been largely designed to keep a lid on the country’s borrowing rates. But some analysts think the downgrade will help push the government to finally request the help.
Earnings expectations are low for the third quarter as the debt crisis continues to take a toll on the economies in Europe. The malaise has also spread to developing economies such as China.
“Expectations are for a 2.1 per cent year-over-year decline in S&P 500 operating earnings — the first year-over-year drop since the recession,” said BMO Capital Markets senior economist Robert Kavcic.
“Also, half of the 10 major sectors are expected to be in the red, so the earnings slowdown is relatively broad based and not just a one-sector phenomenon.”
Merger and acquisition news also helped support markets.
The Wall Street Journal reported that Sprint Nextel is in advanced talks to be acquired by Japanese cellphone company Softbank Corp. in a transaction valued at more than US$12.8 billion. Sprint Nextel shares surged 13.1 per cent to US$5.70 in New York.
All TSX sectors save real estate were higher while resource stocks led gainers as prices for oil and metals advanced.
The energy sector was up 0.6 per cent as oil continued to find support from worries that the Syrian conflict is escalating. Traders worry that the civil war in Syria could grow into a wider regional conflict that could threaten oil supplies from Middle East producers. The Middle East and North Africa account for about a third of global oil production. The November crude contract on the New York Mercantile Exchange was up 88 cents at US$92.13 a barrel. Canadian Natural Resources (TSX:CNQ) rose 24 cents to C$30.04.
Nexen (TSX:NXY) shares inched up a penny to $25.16 as the federal government extended its review period for the proposed $15.1-billion takeover of the energy company by China’s state-owned offshore oil company. The review under the Investment Canada Act is being extended by 30 days. An initial 45-day review period was set to end Friday.
The base metals sector climbed 1.7 per cent as December copper climbed four cents to US$3.75 a pound. Teck Resources (TSX:TCK.B) ran ahead 54 cents to C$30.44.
The gold sector climbed 0.65 per cent while December bullion edged up $5.70 to US$1,770.80 an ounce.
NovaGold Resources Inc. (TSX:NG) gained 13 cents to $5.04 as the company reported a third-quarter net loss of $21.5 million or eight cents per share. That is less than half of its net loss of $52.1 million or 22 cents per share from a year ago.
The exploration and development miner, whose flagship asset is its 50 per cent owned Donlin gold project in Alaska, did not report any revenues for the quarter.
Techs also advanced as Research in Motion Ltd. (TSX:RIM) gained eight cents to $7.69, while CGI Group (TSX:GIB.A) improved by 19 cents to $26.30.
In other economic news, Statistics Canada said both imports and exports fell in August, narrowing the trade deficit with the world to $1.3 billion from $2.5 billion in July.
At the same time, the U.S. trade deficit widened in August as exports fell to the lowest level in six months, a worrisome sign that a slowing global economy is cutting into demand for U.S. goods. The deficit increased to $44.2 billion in August, the biggest gap since May and a 4.1 per cent increase from July, the Commerce Department said Thursday.
European bourses were also positive as London’s FTSE 100 index rose 0.9 per cent, Frankfurt’s DAX and the Paris CAC 40 gained 1.17 per cent.