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At the open: Stocks, commodities get lift

Traders work the floor at the New York Stock Exchange in December 20. Last week’s flare-up in the markets was prompted by news that the largest economy in the world is improving.


The Toronto stock market was higher Thursday amid rising commodity prices and positive consumer and employment data from the U.S.

The S&P/TSX composite index gained 54.08 points to 12,005.98.

On the corporate front, Aimia (TSX:AIM), the company that runs the Aeroplan customer loyalty program says it's prepared to replace CIBC (TSX:CM) as its bank credit card partner at the end of this year unless it matches contractual terms offered by TD Bank (TSX:TD). CIBC says it's reviewing the proposed terms to see if it will exercise its right of first refusal and that it will continue the Aeroplan business as usual in the meantime. CIBC slipped 17 cents to $74.86 while Aimia gained $1.16 to $15.08.

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The Canadian dollar advanced 0.12 of a cent to 95.55 cents US.

New York indexes also advanced as the Dow Jones industrials gained 119.07 points to 15,029.21, the Nasdaq ran ahead 20.25 points to 3,396.47 while the S&P 500 index climbed 11.33 points to 1,614.59.

The Commerce Department said Thursday that consumer spending rose 0.3 per cent last month. That made up for a 0.3 per cent decline in April, which was the biggest drop since the fall of 2009. The rise in spending was due in part to a 0.9 per cent increase in purchases of durable goods such as autos.

Income rose 0.5 per cent in May, the biggest gain since February and much better than the 0.1 per cent April increase.

And the number of Americans seeking unemployment benefits fell 9,000 to a seasonally adjusted 346,000.

The four-week average, a less volatile figure, declined 2,750 to a near five year low of 345,750.

Applications are a proxy for layoffs.

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On the TSX, the base metals component was ahead 1.8 per cent while July copper rose one cent to US$3.05 a pound. Teck Resources (TSX:TCK.B) climbed 46 cents to C$22.22.

The gold sector gained about 1.4 per cent as bullion prices stabilized with the August contract on the Nymex ahead $2.40 to US$1,232.20 an ounce.

Gold stocks sustained sharp losses Wednesday as speculation about when the Federal Reserve may ease up on its monthly bond purchases pushed bullion prices to three-year lows. Gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies. Goldcorp Inc. (TSX:G) advanced 44 cents to C$23.84.

The energy sector was ahead 0.66 per cent with the August crude contract on the New York Mercantile Exchange up 47 cents to US$95.97 a barrel. Canadian Natural Resources (TSX:CNQ) improved by 31 cents to C$30.01.

The telecom sector continued to lose ground in the wake of a report that American telecom giant Verizon Communications could be set to compete with the established Canadian players in the wireless business. The sector fell heavily Wednesday after the Globe and Mail reported that Verizon is looking at two of Canada's smaller wireless network operators. It has reportedly made an initial offer of $700-million for Wind Mobile and is starting talks with Mobilicity. Rogers Communications fell 84 cents or two per cent to $40.83 after tumbling nine per cent Wednesday.

Buying sentiment was also improved Thursday after data released Wednesday showed weaker than expected U.S. growth in the first quarter, which raised hopes the Fed is in no hurry to cut back on its US$83-billion of bond purchases each month. Figures showed the U.S. economy grew at only a 1.8 per cent annualized rate in the first quarter, instead of the previous estimate of 2.4 per cent.

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The mood was further improved Thursday as interbank lending rates in China continued to ease after a pledge earlier in the week by authorities to shore up banks facing cash shortfalls.

The central bank had allowed rates that banks pay to borrow from each other to soar last week, part of an attempt by Beijing to clamp down on massive credit in the informal lending industry.

Fears of a credit crisis in the world's second-biggest economy had contributed to a selloff in global markets that ended when policymakers in China softened their stance with the promise to provide "liquidity support" if needed.

Earlier in Asia, Japan's Nikkei 225 jumped three per cent, Hong Kong's Hang Seng gained 0.5 per cent, South Korea's Kospi surged 2.9 per cent while Australia's S&P/ASX 200 added 1.7 per cent.

European bourses were positive as London's FTSE 100 index gained 0.92 per cent, Frankfurt's DAX was ahead 0.47 per cent and the Paris CAC 40 rise 0.59 per cent.

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