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The screens at the TMX Broadcast Centre in Toronto are pictured on on Wednesday, July 11, 2012. (Matthew Sherwood For The Globe and Mail)
The screens at the TMX Broadcast Centre in Toronto are pictured on on Wednesday, July 11, 2012. (Matthew Sherwood For The Globe and Mail)

At the open: TSX higher on hopes of Chinese stimulus Add to ...

The Toronto Stock Exchange rebounded slightly just after the open Thursday as commodity prices gained ground on expectations China may move to stimulate its economy.

The S&P/TSX composite index added 47.75 points to 12,280.61 after closing lower Wednesday as commodities dropped amid discord over austerity measures expected to be announced by heavily indebited European countries.

The Canadian dollar lifted 0.19 of a cent to 101.69 cents US as investor sentiment improved slightly.

Wall Street also opened higher, with the Dow ahead 48.42 points to 13,461.93, the Nasdaq 8.79 points higher at 3,102.49 and the broader S&P 500 up 5.73 points at 1,439.05.

The benchmark New York oil contract was ahead $1.09 at US$91.07 a barrel, the December gold contract added $12.40 to US$1,766 an ounce and the December copper contract rose two cents to US$3.73 a pound.

The market gains were helped by expectations that the People’s Bank of China will soon take more steps to stimulate the world’s No. 2 economy, which has been slowing. The country is a big consumer of commodities for its manufacturing sector.

Worries about a slowing Chinese economy have combined with unrest in Europe to pressure the market this month.

There was also a bit of respite in Europe. Greek officials said Thursday that after weeks of fruitless efforts, the heads of the three parties in Greece’s governing coalition have struck a basic deal on a new round of harsh austerity measures required for the country to continue getting vital rescue loans.

Though the mood in markets has improved modestly, investors remain concerned about developments in Europe, where Greece and Spain have witnessed violent protests against debt reduction measures due to be announced this week.

Greater focus will probably centre on Spain, where the government is to unveil new austerity policies later Thursday amid mounting concerns over the country’s economic future.

Recession-hit Spain has come under pressure to tap a bond-buying program from the European Central Bank that has been partly designed to keep a lid on the country’s borrowing costs. But the government has been reluctant to request the help for fear of the conditions attached.

However, the FTSE 100 index of leading British shares was up 0.2 per cent while Germany’s DAX rose 0.3 per cent and the CAC-40 in France was 0.6 per cent higher.

Investors were also reacting to a positive sign in a U.S. Commerce Department report on August business orders for durable goods, or items that are expected to last for at least three years. While the overall number dropped sharply because of a huge decline in commercial aircraft orders, business orders for machinery, electronics and other equipment, which are a good indication of their investment plans, rose 1.1 per cent. That’s the first increase since May.

One less positive sign came in another report from Commerce, which said that the U.S. economy grew even more sluggishly in the April-to-June quarter than previously thought.

The agency revised the annual growth rate to 1.3 per cent, down from its previous estimate of 1.7 per cent. The revision mainly came as a result of slashing estimates for crop production by $12 billion, reflecting the drought that battered farms this summer.

Investors also got word from the U.S. Labour Department that the number of Americans seeking unemployment benefits last week plunged to the lowest level in nine weeks, a hopeful sign for the job market.

In Canada, traders took in a Statistics Canada report that the average weekly earnings for non-farm payroll employees was $906.68 in July, up 1.1 per cent from the previous month.

It said the earnings were also up 4.1 per cent from July 2011, reflecting a number of factors, including wage growth, changes in the composition of employment, as well as average hours worked per week.

In Canadian corporate news, a glimpse into the state of struggling BlackBerry maker Research In Motion (TSX:RIM) will be revealed when the company releases its second-quarter financial results after markets close. Shares rose 1.3 per cent, or nine cents, to $6.97.

And eye drug developer QLT Inc. (TSX:QLT) said Thursday it plans to buy back up to 3.4 million of its shares over the next year as the first step in a plan to return $100 million to stockholders. Its shares rose 3.5 per cent or 27 cents to $8.

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