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At midday: TSX up on rising commodity prices

Pedestrians pass by the Scotiabank location near Yonge and Bloor Streets in Toronto.

Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail

The Toronto stock market was higher Tuesday as prices for oil and metals advanced and Scotiabank delivered quarterly earnings that beat expectations.

Europe was also in focus on concerns about the Spanish banking sector, which is weighed down by huge losses caused by the collapse of the real estate market.

The S&P/TSX composite index was up 65.42 points to 11,631.57 while the TSX Venture Exchange dipped 1.87 points to 1,323.14.

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Scotiabank's second-quarter profit was $1.46-billion or $1.15 per diluted share. That's down from a year ago, when Scotiabank's bottom line was helped by special items but slightly ahead of analyst estimates.

Adjusted earnings were $1.18 per share, three cents higher than the consensus estimate of analysts compiled by Thomson Reuters and its shares gained 91 cents to $51.70 (U.S.).

The Canadian dollar was unchanged at 97.68 cents (U.S.).

U.S. markets were also higher as traders balanced data showing a steadily recovering housing sector with a poorer-than-expected reading on consumer confidence.

The Standard & Poor's/Case-Shiller home price index showed that home prices rose in March from February in most major U.S. cities for the first time in seven months. Prices increased in 12 of the 20 cities it tracks.

"With the economic recovery now on firmer ground, we see no reason to alter our view that US house prices have now found a floor," said a commentary from Capital Economics.

However, the Conference Board said its Consumer Confidence Index came in at 64.9 for May, down from a revised 68.7 in April. Economists were expecting a reading of 70.

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The Dow Jones industrial average jumped 138.16 points to 12,592.99 as traders got back to work following the Memorial Day holiday.

The Nasdaq composite index gained 38.12 points to 2,875.65 while the S&P 500 index was ahead 15.02 points to 1,332.84.

New York markets also got a delayed bounce after polls released over the weekend showed Greek pro-bailout parties hold a narrow lead ahead of elections slated for June 17. But analysts say that uncertainty over the ultimate outcome of the elections will keep market sentiment fragile and prone to swings in mood.

Commodity prices gained ground amid rumours that China will relax monetary policy and announce fiscal stimulus measures to offset slowing economic growth.

China's huge appetite for oil and metals has been a primary driver for higher commodity prices and resource stocks on the TSX. However, prices for items such as crude and copper and resource stocks have taken a beating over the last couple of months on worries the global economic recovery is losing momentum. For example, the TSX materials and energy indexes have plunged about 10 per cent this year and oil and copper prices have sunk to multi-month lows.

The July copper contract added four cents to $3.49 (U.S.) a pound, taking the base metals sector up 2.55 per cent. Teck Resources rose $1.18 to $32.51.

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The TSX energy sector rose 0.65 per cent as the July crude contract on the New York Mercantile Exchange was up 61 cents to $91.47 (U.S.) a barrel. Suncor Energy gained 33 cents to $29.23.

The gold sector edged up 0.15 per cent while the June bullion contract in New York gained $10.50 to $1,579.40 (U.S.) an ounce. Goldcorp Inc. improved by 35 cents to $38.68.

Shares in Kinross Gold Corp. ran up 17 cents to $8.59 after the miner said it is selling its 50 per cent interest in Crixas gold mine in Brazil to AngloGold Ashanti of South Africa for $220-million (U.S.).

Scotiabank's performance helped push the financial sector up 0.54 per cent with Bank of Montreal 49 cents higher to $55.06.

Telecoms led decliners with Rogers Communications down 58 cents to $36.02.

Meanwhile, traders demanded higher yields to buy Spanish government debt, following news that the country's fourth-largest lender needs $19-billion (Canadian) in state aid to shore itself up.

The yield on Spanish 10-year bonds rose Tuesday to 6.5 per cent in a sign that investors are turning away even from Spanish debt. The spread between Spanish and German bonds remained at an alarming 5.14 percentage points.

Investors fear that the Spanish government, which is already under pressure to lower its debts at a time of recession and record-high unemployment, will be overwhelmed by the cost of saving the country's banking sector.

European bourses were positive with London's FTSE 100 index ahead 0.53 per cent, Frankfurt's DAX climbed 1.32 per cent and the Paris CAC 40 rose 1.42 per cent.

Earlier in Asia, Japan's Nikkei 225 index rose 0.7 per cent, Hong Kong's Hang Seng gained 1.4 per cent and South Korea's Kospi climbed 1.4 per cent. China's benchmark Shanghai Composite Index jumped 1.2 per cent.

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