The Toronto stock market was positive Friday amid rising commodity prices and a lower-than-expected reading on Canadian inflation.
The S&P/TSX composite index extended gains to a fourth session, up 32.33 points to 12,064.92 while the TSX Venture Exchange gained 5.32 points to 1,226.57.
The Canadian dollar backed off 0.27 of a cent to 101.08 cents (U.S.) after closing at a fresh 3 1/2-month high Thursday after Statistics Canada reported that the Consumer Price Index declined 0.1 per cent on a seasonally adjusted basis in July, after decreasing 0.2 per cent in June. Economists had looked for a 0.1 per cent rise.
The agency said Friday that consumer prices rose 1.3 per cent in the 12 months to July, following a 1.5 per cent gain in June.
Core inflation – which excludes volatile items like energy and fresh fruit and vegetables – rose 1.7 per cent in the 12 months ended in July, down from a two per cent reading in July. The loonie was down from early highs as analysts suggested the data represented another reason for the Bank of Canada to keep interest rates on hold.
"With core inflation running below target and external headwinds still blowing, we don't expect the Bank of Canada to resume tightening until well into next year," said BMO Capital Markets senior economist Robert Kavcic.
U.S. markets were up at the end of a positive week.
The Dow Jones industrials edged 4.53 points higher at 13,254.64.
The Nasdaq composite index was 3.5 points higher to 3,065.89 while the S&P 500 index added 0.56 of a point to 1,416.07.
The TSX also finished at a 3 1/2-month high Thursday, closing above 12,000 for the first time since early May when the European debt crisis took a turn for the worse as markets focused on high debt levels in Spain. Traders were encouraged by a solid reading on American housing starts and hopes that central bankers are prepared to do whatever is necessary to keep the economic recovery on track and preserve the European monetary union.
This was also the case Friday when traders reacted favourably to remarks by German Chancellor Angela Merkel during her visit to Ottawa. She said Thursday that her country – which has Europe's biggest economy – is committed to doing everything it can to maintain the euro currency union.
There have also been high hopes that the U.S. Federal Reserve will announce another round of economic stimulus in September. But such a move has been thrown into doubt in the wake of recent positive economic data, including better than expected readings on job creation, retail sales and industrial production.
Commodity prices were higher and the base metals sector led gainers, up 0.89 per cent as copper added to Thursday's three-cent advance, up another four cents to $3.42 (U.S.) a pound. Prices for the metal, viewed as an economic bellwether as it is used in so many industries, gave up ground earlier this week in the wake of weak Chinese export growth data and much lower than expected Japanese economic growth in the second quarter. First Quantum Minerals climbed 30 cents to $19.97.
The gold sector was ahead 0.4 per cent with bullion prices up 60 cents to $1,619.80 (U.S.) an ounce. Goldcorp Inc. rose 57 cents to $38.50.
The energy sector gained 0.3 per cent with the September crude contract on the New York Mercantile Exchange ahead four cents to $95.64 (U.S.) a barrel. Suncor Energy was ahead 15 cents to $32.21.
Financials were also positive with TD Bank ahead 43 cents to $80.91.
Elsewhere on the economic calendar, traders get the latest read on consumer confidence through the University of Michigan's widely-watched index later in the morning.
European bourses were positive, with London's FTSE 100 index up 0.11 per cent, Frankfurt's DAX up 0.45 per cent but the Paris CAC 40 was up 0.26 per cent.
Stocks in Asia registered broad gains. Japan's Nikkei 225 index rose 0.8 per cent to close at its highest finish in more than three months. Hong Kong's Hang Seng added 0.8 per cent and Australia's S&P/ASX 200 gained 0.9 per cent, while South Korea's Kospi fell by 0.6 per cent. Mainland Chinese shares were mixed. The Shanghai Composite Index gained 0.1 per cent while the Shenzhen Composite Index lost 0.3 per cent.