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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, April 29.Michael Nagle/Bloomberg

Canadian stocks advanced on Friday, finishing with a third straight monthly gain, as raw-materials rallied on First Quantum Minerals Ltd.'s earnings and the nation's economy contracted less than expected in February.

The benchmark Standard & Poor's/TSX Composite Index rose 0.47 per cent, or 65.02 points, to 13,951.45 in Toronto. The gauge increased 3.3 per cent in April, matching the longest monthly winning streak since August 2014. The S&P/TSX is one of the best-performing developed markets in the world this year as it rebounds from last year's worst annual decline since 2008.

Canada's gross domestic product declined 0.1 per cent in February, smaller than the median 0.2-per-cent estimate in a Bloomberg survey of economists. The decline is the first in five months, a rare setback in a quarter economists expect will actually show the best expansion in more than a year. Statistics Canada kept in place its January growth estimate of 0.6 per cent, the fastest since 2013.

Raw-materials shares surged 5.3 per cent to an 11-month high. Only three groups among 10 in the S&P/TSX finished in positive territory.

First Quantum jumped 16.7 per cent, climbing to a eight-month high, after reporting first-quarter earnings and revenue ahead of analysts' estimates. The results reflect higher copper, nickel and zinc output from continuing operations, including the new Sentinel mine, according to Eily Ong, a Bloomberg Intelligence analyst.

Energy producers erased early gains, finishing down 0.1 per cent. Oil prices ended steady on Friday after hitting 2016 highs but finished April trading about 20 per cent higher, with Brent crude having its best monthly gain in seven years.

The resource-dominant S&P/TSX remains closely linked to moves in commodities prices, with a 17-per-cent rally in the benchmark equity gauge from a Jan. 20 low aligning with a rebound in crude from the lowest levels since 2003. Raw-materials and energy producers are the two top-performing industries in Canada so far this year, up more than 14 per cent.

The Canadian benchmark now trades at 21.6 times earnings, about 14 per cent higher than the 19 times earnings valuation of the Standard & Poor's 500 Index, according to data compiled by Bloomberg.

Air Canada soared 12.68 per cent, the most in two years, as the airline reported an unexpected first-quarter profit, benefiting from falling fuel prices and rising traffic.

Valeant Pharmaceuticals International Inc. slipped 5.45 per cent after filing its delayed 2015 annual report and saying it may make significant changes to its business strategy. The shares erased a surge of 4.7 per cent. Neither outgoing Chief Executive Officer Mike Pearson nor former Chief Financial Officer Howard Schiller will stand for re-election and five independent directors have also told the board they will not run again.

U.S. stocks fell, with the Standard & Poor's 500 Index posting the worst two-day drop since February, amid lackluster earnings and few signs of a pickup in economic growth.

Equities rebounded sharply in the final hour of trading, with the S&P 500 cutting its worst losses by more than half. Corporate reports jostled stocks, as Gilead Sciences Inc. retreated 9 per cent, the biggest drag on the benchmark after its profit missed estimates. Apple Inc. slumped for a seventh session a day after Carl Icahn said he cashed out his stake in the company. Amazon.com Inc. surged after posting better-than-estimated results.

The S&P 500 declined 0.5 per cent to 2,065.40 in New York, eking out a 0.3-per-cent gain for the month, while losing 1.3 per cent this week, the most since February.

"A lot of optimism came into the market last week as we crossed 2,100, which makes it vulnerable to a short-term pullback, and that's what we're getting right now," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110-billion. "The weakness that developed yesterday and today has stemmed from weak earnings. The market is being supported by very favorable monetary policy, but valuations are very stretched and earnings aren't coming through."

As policy makers and investors assess the health of the world's biggest economy, a report Friday added to concerns growth is struggling to gain traction. Consumer spending rose less than forecast in March, wrapping up the weakest quarter in a year for the biggest part of the U.S. economy even as incomes accelerated. Faster wage growth may be needed to help encourage American consumers to spend more freely and jump start an economy coming off its weakest performance in two years.

A separate measure showed consumer confidence fell to a seven-month low in April as Americans' expectations about economic growth dropped to the lowest point since September 2014. Trader bets for a Federal Reserve interest-rate rise in June have fallen to 14 percent from 20 percent a week ago, while the first meeting with at least even odds for an increase has been pushed back a month to December.

Energy producers are the strongest April performers in the S&P 500, tracking crude to a five-month high. Technology stocks have been battered by a batch of weaker-than-forecast earnings from heavyweights such as Apple, Microsoft Corp. and Google parent Alphabet Inc. The group capped its for the worst month since August.

A weaker U.S. dollar and optimism that a global oil glut will ease have lifted crude futures by more than $20 a barrel since they plumbed 12-year lows below $30 in the first quarter.

Brent futures settled just a penny lower at $48.13 a barrel, after reaching a 2016 peak at $48.50. It rose 21.5 per cent in April, its largest monthly advance since May 2009.

U.S. crude futures closed 11 cents lower at $45.92 a barrel, after hitting a year-to-date high at $46.78. It gained 20 per cent in April, the biggest monthly gain in a year.

With prices less than $5 away from $50 a barrel, investment bank Jefferies said the market "is coming into better balance" and would flip into undersupply in the second half of the year.

But others warned that the rally was driven by investors holding large speculative positions, while oil stockpiles were still high, with a Reuters survey showing OPEC output in April rising to its most in recent history.

"The issue is that we haven't seen price rallies ... correlate with fundamentals," said Hamza Khan, senior commodity strategist at ING. "The fundamentals - high stocks, high production - haven't changed."

Technical analysts said crude could cruise to $50 a barrel but stiffer resistance before $55 could spark profit-taking on the market's biggest rebound in two years.

Analysts polled by Reuters raised their average forecast for Brent in 2016 to $42.30 per barrel, the second consecutive month of increases.

Bank of America Merrill Lynch said in a note that "non-OPEC oil supply is indeed hanging off a cliff," and estimated that global output would contract year-on-year in April or May for the first time since 2013.

The OPEC survey aside, Saudi oil output was expected to edge up by 350,000 barrels per day to around 10.5 million bpd, sources told Reuters, as tankers filled with unsold oil floated at sea seeking buyers.

The discount in spot U.S. crude to the next trading month meanwhile whittled to its smallest since January, reducing the advantages of storing oil in the United States for later delivery.

With files from Reuters

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