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European Central Bank (ECB) President Mario Draghi testifies before the European Parliament's Economic and Monetary Affairs Committee in Brussels July 9, 2012.FRANCOIS LENOIR/Reuters

Hopes for central bank stimulus sent stocks broadly higher, with the Dow Jones industrial average sailing through the psychologically important 13,000 level for the first time since late May, and Toronto stocks gaining for the fourth straight session.

The S&P/TSX composite index soared 127 points or 1.1 per cent to close at 11,766, in a broad-based advance led by energy shares. The Dow Jones rose 188 points or 1.5 per cent.

The market shrugged off a disappointing U.S. second quarter GDP increase of 1.5 per cent, a slowing from the 2-per-cent pace in the first three months of the year, focusing instead on speculation that both the Federal Reserve Board and the European Central Bank will take actions next week to spur growth.

Stocks were further buoyed from a statement following a telephone meeting by German chancellor Angela Merkel and French president Francois Hollande pledging that they would take action to protect the euro zone.

This follows a similar remark on Thursday along the same lines by ECB president Mario Draghi.

The rally is "primarily due to news flow out of the euro zone," said Kien Lim, associate strategist at RBC Capital Markets.

The advance gained momentum in afternoon trading, based on speculation that the ECB and the German Bundesbank would hold talks on a new round of stimulus measures.

Traders were also primed for action by the Federal Reserve Board in the U.S., which holds a rate policy meeting next Tuesday and Wednesday.

"I'm expecting the Fed to say something, at least give some clues as to what they're going to do," said Adrian Mastracci, portfolio manager at KCM Wealth Management Inc. in Vancouver.

He said markets have built up such high expectations for more help from the Fed that a failure to make an announcement would be a major disappointment.

"If they said nothing about it, I think that would be devastating for investors," Mr. Mastracci said.

Toronto was aided by a gain in commodities, which will benefit through any move to have looser monetary policy. Gold rallied $9.90 (U.S.) to $1,626 an ounce in late trading, while crude oil advanced 70 cents to $90.09 a barrel.

Progress Energy Resources surged 14 per cent to close at $22.83 a share after sweeter terms in a takeover from Petronas International. The new acquisition price is $22 (Canadian) a share, up from $20.45.

Cameco Corp. fell 2.4 per cent after disappointing quarterly profit results caused by reduced uranium shipments. Earnings after an accounting adjustment were 9 cents a share, compared with a consensus estimates of 22 cents.

Eldorado Gold Corp. shrugged off an earnings miss and reduced its full year production guidance, to gain 5.5 per cent.

The company says it will now mine 660,000 ounces this year from a previous range of 730,000 to 775,000.

Hopes that the ECB may take action spurred buying of banks, which would benefit from reduced fears of financial contagion from European lenders. The Royal Bank of Canada advanced 1.7 per cent, Bank of Nova Scotia 1.4 and Toronto-Dominion Bank 1.5 per cent.

Life insurers snapped back from major losses earlier this month, spurred on by hopes that the market rally and higher interest rates will boost profits. Sun Life Financial Inc. gained 2.5 per cent and Manulife Financial Corp. 3.7 per cent.

Investors continued to unload Barrick Gold Corp., which fell another 1.7 per cent, following the release on Thursday of disappointing profits figures and the announcement of major cost escalation at a key Chilean mine.

In the U.S., Facebook Inc. tumbled 11.7 per cent to $23.71 (U.S.) a share. The company disappointed the markets with its first quarterly results as a public company.

The shares were issued at an IPO in May at $38, and except for a brief period, have traded below the issue price.

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