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A trader works on the floor of the New York Stock Exchange shortly before the closing of the market in New York, August 15, 2013. (LUCAS JACKSON/REUTERS)
A trader works on the floor of the New York Stock Exchange shortly before the closing of the market in New York, August 15, 2013. (LUCAS JACKSON/REUTERS)

At the open: Stocks up sharply on debt impasse optimism Add to ...

The Toronto stock market registered a solid, early gain Thursday as traders hoped a meeting between President Barack Obama and top Republican leaders will lead to a funding deal to reopen the U.S. government and head off a possible default.

The S&P/TSX composite index ran up 109.36 points to 12,839.69.

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The Canadian dollar dipped 0.01 of a cent to 96.2 cents US on top of two days of declines, reflecting a growing sense of unease as the U.S. headed toward an Oct. 17 deadline when the government starts to run out of money to pay creditors.

U.S. indexes were sharply higher as the Dow Jones industrials surged 168.68 points to 14,971.66, the Nasdaq was up 56.5 points to 3,734.28 and the S&P 500 index was ahead 20.76 points to 1,677.16.

Markets have been under pressure since Oct. 1 when a budget impasse resulted in a partial shutdown of the U.S. government.

Republicans have been demanding changes to Obama’s signature health-care legislation and spending cuts in return for a funding measure that would reopen the government and increase the debt limit.

But hopes for a compromise at the meeting between the two sides gave markets a reason to rise.

“It now appears that President Obama and House Republicans could be very close to ironing out a deal, a potential short-term debt compromise which will allow time for broader budget negotiations,” said Ian Pollick, fixed income strategist at RBC Dominion Securities.

“While nothing is official at this point, the action in the equity futures pit this morning is pricing the event as if it were already done.”

Most U.S. government reports have been choked off as a result of the government shutdown, including the key September jobs report which was to have come out last Friday.

However, there was a rare bit of U.S. economic data on Thursday as the Labor Department said that the number of people applying for unemployment benefits jumped by 66,000 last week to a seasonally adjusted 374,000.

The spike was largely because California processed a huge backlog of claims and because the partial government shutdown prompted some contractors to cut jobs.

Base metal stocks led TSX advancers, up 1.25 per cent even as worries about the economic fallout from the Washington budget impasse continued to impact commodity prices. December copper was down one cent at US$3.22 a pound, for a loss of 2.5 per cent so far this week. Teck Resources (TSX:TCK.B) climbed 33 cents to C$26.75.

The energy sector gained 1.18 per cent even as the November crude contract on the New York Mercantile Exchange moved down 25 cents to US$101.36 a barrel. Canadian Natural Resources (TSX:CNQ) advanced 80 cents to C$32.83.

The industrials component ran up one per cent and Canadian National Railways (TSX:CNR) rose $1.57 to $109.51.

Financials gained 0.8 per cent as Royal Bank (TSX:RY) rose 69 cents to $67.09.

The gold sector was the major decliner, down 1.1 per cent as December gold bullion fell $11.30 to US$1,295.90 an ounce. Goldcorp Inc. (TSX:G) faded 34 cents to C$25.30.

On the corporate front, telecom giant Rogers Communications (TSX:RCI.B) is trying to determine what caused a massive outage over several hours Wednesday night. Both wireless voice and text messaging services were down. Rogers has about 10 million wireless customers across Canada. Rogers shares gained 36 cents to $45.54.

Space technology company Com Dev International Ltd. (TSX:CDV) says it has received its largest commercial award ever, a contract “in excess of $65-million” to supply components for a network of global communications satellite. The Cambridge, Ont.,-based company says it will supply C, Ku-band and Ka-band multiplexers, switches and microwave components for a number of satellites that will be part of the satellite network. Its shares were ahead 13 cents to $4.19.

European bourses were higher as London’s FTSE 100 index rose one per cent, Frankfurt’s DAX climbed 1.37 per cent and the Paris CAC 40 was up 1.55 per cent.

In Asia, Japan’s Nikkei rose 1.1 per cent, South Korea’s Kospi fell nearly 0.1 per cent and Australia’s S&P/ASX 200 shed 0.1 per cent after the release of worse than expected unemployment data. Benchmarks in Singapore, Indonesia and Thailand rose while mainland China fell.

 

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