The Toronto stock market advanced Friday as tension over Iran helped drive oil prices to a fresh nine-month high and boosted energy stocks.
A strong earnings report from auto parts giant Magna International Inc. (TSX:MG) also helped send the S&P/TSX composite index up 17.71 points to 12,748.99 while the TSX Venture Exchange was off 1.97 points to 1,692.17.
Magna shares rose $2.89 or 6.43 per cent to $47.84, having reported after the market close Thursday that it would raise its dividend 10 per cent to 27.5 cents a share. The company also posted quarterly net profits that nearly doubled from a year ago to US$312 million, or $1.32 per share.
The Canadian dollar failed to catch a lift from higher oil and metal prices, down 0.07 of a cent at 100.17 cents US.
Traders worry that sharply higher oil prices could impact the economic recovery in the United States, Canada's biggest trading partner.
U.S. markets were higher amid mixed housing sector news and data showing rising consumer confidence.
New home sales were down by 0.9 per cent in January to a seasonally adjusted annual rate of 321,000. That followed four straight months of gains in which home sales rose 10 per cent. The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year.
Meanwhile, the widely watched University of Michigan's consumer sentiment index rose to 75.3 in February, the highest reading in a year and up from a January reading of 75.
"We are in a recovery phase, there's no question about it," said Jim Muir, director at Fraser Mackenzie.
"There's a lot of things that are going the right way."
The Dow Jones industrial average could be headed for its first close above the 13,000 mark since May, 2008. The blue chip barometer gained 16.42 points to 13,001.11.
The Nasdaq composite index was 7.87 points higher to 2,964.85 while the S&P 500 index was ahead 3.72 points to 1,367.18.
The TSX energy sector gained 0.4 per cent as the April crude contract on the New York Mercantile Exchange gained 34 cents to US$108.17 a barrel. The Brent crude contract in London dipped three cents at US$123.59 a barrel. Suncor Energy (TSX:SU) gained 65 cents to C$37.04 and Nexen (TSX:NSY) shares gained 49 cents to $21.35 after the energy company said Friday that first oil has been produced at its Usan offshore field near West Africa. The Calgary-based company holds a 20 per cent working interest in the project.
Crude oil had advanced more than $1.50 on Thursday amid data showing the number of people seeking unemployment benefits last week was unchanged and that the four-week average was the lowest in four years. Other data showed house prices rising at the end of last year.
But Iran has been widely responsible for crude jumping from $96 earlier this month amid growing tension over the country's nuclear program and fears global crude supplies could be disrupted. Some analysts expect economic sanctions by the United States and Europe and countermeasures by Iran will help keep crude prices elevated this year.
Economists are voicing concern that a continuing run-up in oil prices could threaten the fragile economic recovery in the U.S. and deepen a recession in Europe.
Metal prices also advanced amid speculation that local governments in China would relax restrictions on the property market and monetary authorities would tweak policy to stimulate growth.
Copper prices are up about four per cent this week after the People's Bank of China announced last weekend it was lessening reserve requirements at banks to encourage lending. China is the world's biggest consumer of copper, viewed as an economic barometer as it is used in so many businesses.
The base metals sector gained 0.8 per cent as March copper contract edged five cents higher to US$3.86 a pound. Teck Resources (TSX:TCK.B) ran up 36 cents to $41 and Lundin Mining (TSX:LUN) gained 10 cents to C$5.17.
The gold sector was the biggest drag amid mixed earnings news and lower gold prices.
Eldorado Gold Corp. (TSX:ELD) said profits nearly doubled to $88.8 million in the fourth quarter as the company benefited from higher prices. Revenues grew to $303.3 million from $213 million and its shares gained 38 cents to $15.24.
Iamgold Corp. (TSX:IMG) on Thursday reported an eight per cent jump in fourth-quarter profits on the back of higher gold prices. Net earnings were $133.6 million, or 36 cents, compared to $124.1 million, or 33 cents in the same 2010 period. Revenues were $481.6 million, an increase from $440.9 million, primarily due to a 19 per cent rise in realized gold prices. However, its shares were down $1.25 or 7.14 per cent to $16.25.
Bullion prices pulled back as the April contract shed $10.60 to US$1,775.70 an ounce.
Over the weekend, investors will be interested in what transpires at a meeting of the G20 finance ministers and central bank governors in Mexico. While the gathering will focus on promoting global economic stability and growth, Europe's debt crisis will remain a key topic.
In particular, European officials will press for countries like the U.S., China and the U.K. to allow the International Monetary Fund to contribute more money to eurozone rescue measures. Several countries are reluctant to expose the IMF to more risk in Europe.
European bourses were mixed as London's FTSE 100 index dipped 0.09 per cent while Frankfurt's DAX and Paris CAC 40 gained about 0.55 per cent.
Earlier in Asia, Japan's Nikkei 225 climbed 0.5 per cent, South Korea's Kospi added 0.6 per cent and Hong Kong's Hang Seng rose 0.1 per cent.
China's benchmark Shanghai Composite Index climbed 1.2 per cent to its highest close in more than three months. The smaller Shenzhen Composite Index gained 1.4 per cent.