The U.S. Federal Reserve holds Treasuries for other central banks.JOSHUA ROBERTS/Reuters
The Toronto stock market shed early losses mid-morning Thursday as positive economic data helped balance interest rate concerns.
The S&P/TSX composite index gained 9.46 points to 14,343.5.
The Canadian dollar was down 0.08 of a cent to 88.85 cents (U.S.) after tumbling almost 9/10s of a cent Wednesday, following an indication from U.S. Federal Reserve chair Janet Yellen that American interest rates could be headed higher earlier than thought.
Positive economic data helped U.S. indexes shed early losses.
The Philadelphia Fed's manufacturing index rebounded to nine in March from a negative 6.3 reading in February, well above expectations for a reading of 3.5.
Also, the Conference Board's leading indicator index, an indicator of future economic performance, increased 0.5 per cent in February, the largest amount in three months, following a slight 0.1 per cent rise in January.
Both reports indicated that any weather-related problems the economy is experiencing now will be short-lived.
The Dow Jones industrials advanced 35.48 points to 16,257.65, the Nasdaq gained 5.14 points to 4,312.74 and the S&P 500 index rose 2.97 points to 1,863.74.
Indexes had been lower earlier after the Fed reaffirmed Thursday its plan to keep short-term rates low. But it no longer mentions a specific unemployment rate that might lead it to raise rates and said instead that it will monitor a wide range of economic data.
Later, Fed chair Janet Yellen signalled that the U.S. central bank could begin raising short-term rates six months after it halts its bond purchases around year's end. The Fed has been cutting back on those purchases, a key element of stimulus that had kept long-term rates low, and said Wednesday it would further taper purchases by another $10-billion a month to $55-billion.
Allan Small, senior adviser at HollisWealth, said the main issue for traders is: Can the market and the U.S. economy handle a rise in interest rates?
"And if economic data continues to get better as we move along in 2014, I think the market is going to turn around and say, you know what, yes the U.S. economy can handle it," Small said.
The gold sector was ahead 0.44 per cent as hopes that the Ukraine crisis won't worsen weakened bullion prices for a fourth day and the April contract lost $12.30 to $1,329 (U.S.) an ounce.
The financials group climbed 0.3 per cent.
Oil prices declined with the April contract down 27 cents at $100.10 a barrel and the energy sector climbed 0.4 per cent.
Nervousness about Chinese growth continued to pummel copper prices with the May contract falling six cents to $2.93 a pound but the base metals sector turned around and was up 0.2 per cent. The metal has tumbled more than nine per cent since March 6.
There have been worries that commodity financing deals in China could unravel, resulting in widespread metals liquidation.
And on Thursday, Goldman Sachs lowered its 2014 gross domestic product forecast for China to 7.3 per cent from 7.6 per cent.
Osisko Mining Corp., which is fighting a hostile takeover attempt by Goldcorp. Inc., says costs are going down and production is rising at its Canadian Malartic mine in northern Quebec. It added it expected to produce between 525,000 to 575,000 ounces of gold this year, up from 475,277 ounces in 2013.