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Traders work on the floor of the New York Stock Exchange shortly after the market opening December 16, 2013. (LUCAS JACKSON/REUTERS)
Traders work on the floor of the New York Stock Exchange shortly after the market opening December 16, 2013. (LUCAS JACKSON/REUTERS)

At midday: TSX posting solid gains, Dow up by triple digits Add to ...

The Toronto stock market registered a solid advance Monday amid strong manufacturing data from the U.S. and Europe and major corporate acquisitions.

Traders also looked ahead to the major economic event of the week — the U.S. Federal Reserve’s meeting Wednesday when markets may find out what the central bank intends to do about cutting back on a key area of stimulus.

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The S&P/TSX composite index gained 80.2 points to 13,205.9 while rising commodities helped push the Canadian dollar ahead 0.15 of a cent to 94.53 cents US.

U.S. indexes were up sharply as investors wait to see if the Fed will start to taper its monthly US$85 billion of bond purchases.

The Dow Jones industrials ran ahead 144.31 points to 15,899.67, the Nasdaq rose 29.33 points to 4,030.31 and the S&P 500 index climbed 12.98 points to 1,788.3.

Speculation about Fed intentions has grown considerably over the past couple of weeks in the wake of a series of strong economic data, particularly a solid employment report for last month. Also, a bipartisan committee struck a U.S. congressional budget bill, which would remove the threat of another government shutdown.

However, there are many in the markets who think the Fed will want to consider more economic data before making the decision to taper. And analysts point out that with inflation only running at an annualized rate of 1.1 per cent in the fourth quarter, that weak price pressures could also serve to keep the Fed sidelined.

“Inflation prints continue to miss,” said Stephen Lingard, managing director, Franklin Templeton Multi-Asset Strategies.

“The backdrop is, it’s still a very deflationary world. And that may be the only thing at this point that prevents the Fed and other central banks from starting to taper.”

Many traders aren’t happy to see an end to the asset purchases as they have kept long-term rates low and supported a strong advance on many markets this year, including the Dow industrials which has surged a good 20 per cent.

That hasn’t been the case in Toronto where the TSX is heavily weighted in favour of the resource sector. The Toronto market ended last week up about 5.6 per cent higher year to date.

The health sector was up over one per cent as Valeant Pharmaceuticals International, Inc. (TSX:VRX) announced a friendly deal to acquire Solta Medical, Inc. a California-based company that makes medical devices used in cosmetic surgery procedures. Its offer of US$2.92 per share for all of Solta’s stock is valued at US$250 million, a 40 per cent premium to Friday’s closing price on Nasdaq. Valeant shares ran ahead $2.14 to $115.21.

The TSX tech sector was also ahead one per cent and Constellation Software Inc. (TSX:CSU) jumped $8.30 to $204.80 as it said it will pay the equivalent of about C$350 million to acquire Dutch software company Total Specific Solutions (TSS) BV.

Elsewhere in the group, BlackBerry shares rose nine cents to $6.51 amid two high level departures at smartphone maker BlackBerry (TSX:BB). BlackBerry’s executive vice president in charge of global sales, Rick Costanzo, will be leaving the company by early next year. And Chris Wormald, who was in charge of BlackBerry’s mergers and acquisitions strategy, will be gone by the end of this month. BlackBerry posts earnings on Friday.

The financials sector rose one per cent as Royal Bank (TSX:RY) climbed 83 cents to $69.06.

Commodity prices advanced as U.S. factory production rose a solid 0.6 per cent November, led by a surge in auto output.

Financial information company Markit says its purchasing managers index for the eurozone beat expectations, rising to a 31-month high of 52.7 from 51.6 in November. At the same time, the services PMI slipped to a four-month low of 51 from 51.2.

Other data showed that China’s manufacturing sector grew at a slightly slower pace in December, according to a preliminary survey by HSBC. Its flash purchasing managers’ index slowed to a three-month low of 50.5.

The gold sector was ahead about one per cent while February gold added $8.80 to US$1,243.40 an ounce as traders weighted the chances of Fed easing. Barrick Gold (TSX:ABX) improved by 26 cents to C$18.02.

The energy sector was ahead 0.3 per cent while the January crude contract on the New York Mercantile Exchange gained 71 cents to US$97.31 a barrel. Imperial Oil (TSX:IMO) rose 81 cents to C$46.10.

The base metals sector also was up 0.3 per cent as March copper added one cent to US$3.33 a pound.

In other corporate acquisition activity, American insurer AIG is selling its aircraft leasing business International Lease Finance Corp. to AerCap in a cash-and-stock deal valued at approximately $5.4 billion.

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