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New non-residential construction projects are popping up across the country.

The Toronto stock market closed sharply higher Tuesday as a solid earnings report from the biggest U.S. home improvement retailer and a surge in housing starts reinforced sentiment that the American housing sector is rebounding.

The S&P/TSX composite index ran ahead 138.7 points to 15,477.17.

The Canadian dollar lost 0.48 of a cent to 91.38 cents (U.S.) as the greenback strengthened following data that showed American housing starts surged 15.7 per cent in July to an annualized rate of 1.1 million units, the highest level in eight months. That came on the heels of a strong builders sentiment survey released Monday.

The Dow Jones industrials was ahead 80.85 points to 16,919.59, the Nasdaq was up 19.2 points to 4,527.51 and the S&P 500 index rose 9.86 points to 1,981.6.

"The construction data is very important because of jobs," said Paul Taylor, chief investment officer, asset allocation, BMO Asset Management.

"The housing-related jobs have not really contributed over the last couple of years (to overall employment growth) and the fact that we're at 1.1 million housing starts is a strong number. So housing is certainly no longer a headwind, it's a strong tailwind and that's an important factor."

However, he added that it's unlikely to persuade the Federal Reserve to hike interest rates earlier than generally expected, around mid-2015.

There was further positive news from the housing sector as Home Depot Inc. reported its quarterly profit increased by 14 per cent to $2.05-billion (U.S.), or $1.52 per share, beating estimates by eight cents. The home-improvement retailer said revenue rose nearly six per cent to $23.81-billion, better than forecasts of $23.57-billion and its shares rose $4.64 or 5.55 per cent to $88.23. Canadian rival Rona advanced 21 cents or 1.6 per cent to $13.24 (Canadian) on the TSX.

Meanwhile, traders awaited possible guidance on the pace of interest rate increases by the U.S. Federal Reserve in 2015 when chairwoman Janet Yellen delivers the keynote address at the central bank's annual meeting in Jackson Hole, Wyo. She is expected to again signal to the market that the central bank is in no rush to hike rates and when it does, the pace will be gradual.

Most TSX sectors were positive, led by a 1.85 per cent rise in the energy sector even as September crude dropped $1.93 to a seven-month low of $94.48 (U.S.). Prices have plunged 10 per cent in the past month as it has become less likely that Islamic State insurgents would seriously impede Iraqi oil production.

The consumer staples sector was up 0.37 per cent with shares in Alimentation Couche-Tard ahead 44 cents to $31.33 (Canadian) after Reuters reported the Quebec-based retailer is among those shortlisted to buy a minority stake in China's Sinopec Sales, the world's largest fuel retail network. State-run Sinopec Sales is planning on selling a 30 per cent stake by the end of the year. The minority stake has an estimated value of $16-billion (U.S.).

The gold sector was down about 0.35 per cent as December bullion faded $2.60 to $1,296.70 an ounce.

September copper was two cents lower at $3.09 a pound and the base metals sector lost 0.32 per cent.

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