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U.S. Federal Reserve chair Janet Yellen and her international counterparts have been largely silent about the current risks in the financial system. (JOHN GRESS/REUTERS)
U.S. Federal Reserve chair Janet Yellen and her international counterparts have been largely silent about the current risks in the financial system. (JOHN GRESS/REUTERS)

At midday: Markets in positive territory as Fed policy meeting begins Add to ...

The Toronto stock market made some gains Tuesday, as commodity prices fell and the U.S. Federal Reserve opened a two-day policy meeting.

The S&P/TSX composite index added 22.94 points to 15,063.37, while the Canadian dollar dipped 0.20 of a cent to 92.04 cents (U.S.).

Traders will be cautious with any major moves as the Fed meets to discuss its latest economic outlook, and decide whether it will continue to taper its massive bond buyback program. It’s expected the central bank will cut the purchases by $10-billion to $35-billion (U.S.) a month. The stimulus has long helped keep long-term borrowing rates low, and sent markets upwards. The Fed will give its update on Wednesday.

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Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd., says there shouldn’t be any big surprises from the central bank.

“Ever since they started tapering, we haven’t really had any surprises out of them. We’ll be looking at the language of the release and pay attention to the press conference,” he said. “But they’ve been pretty predictable.”

US. indexes were mixed, with the Dow Jones industrials down 13.36 points to 16,767.65, the Nasdaq jumped 8.03 points to 4,329.14 and the S&P 500 futures dipped 1.35 points to 1,936.43.

Meanwhile, Ottawa is expected to release its long-awaited decision on the Northern Gateway pipeline after the markets close Tuesday.

The $7-billion, 1,200 kilometre pipeline would link Alberta oilsands to a terminal in Kitimat on the British Columbia coast for shipment overseas. The project has already received approval from a joint panel of the National Energy Board and the Canadian Environmental Assessment Agency but faces stiff opposition from many First Nations, who have threatened court challenges if the project gets the green light. Shares in Enbridge gained 0.91 per cent, or 47 cents, to $51.98.

Commodity prices ran lower, after enjoying a bump in prices in the last few sessions.

The July crude contract on the New York Mercantile Exchange fell 10 cents to $106.80 (U.S.) a barrel.

The U.S. has sent a small contingent of troops to secure its assets in Iraq, a key global supplier of oil. About 300 U.S. soldiers are being positioned in and around Iraq to protect the U.S. Embassy and other American interests as President Barack Obama weighs options for dealing with the al-Qaeda inspired militants who have captured a vast swath of the country’s north.

Iraq’s crude oil exports have so far not been disrupted, but the conflict raises concern about whether the country can rebuild its oil infrastructure and meet global demand.

Watson said if the instability in Iraq continues, it may give the Toronto Stock Exchange more support to close past its record high of 15,073, set back in June 2008.

But if the current price is any indication, traders are now in a “wait and see” mode with oil prices, to see how the conflict in Iraq will develop.

“That initial risk premium has been put into oil prices,” said Watson. “I don’t think traders are willing to push that premium too high until we see further advances by this insurgency.”

Investors aren’t flocking to gold either, which is usually seen as safe haven amid geopolitical uncertainty. August bullion was down $7 to $1,268.30 (U.S.) an ounce and July copper was up a penny at $3.06 a pound.

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