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At midday: TSX advances on strong economic data

Traders await the Twitter Inc. IPO on the floor of the New York Stock Exchange, in New York, November 7, 2013.


The Toronto stock market was higher Tuesday morning amid a mixed slate of earnings reports and a pair of strong U.S. economic reports.

The S&P/TSX composite index gained 64.01 points to 13,745.49, paced by gains in the mining sector.

The Canadian dollar gave back Monday's advance of almost 1/2 a cent, falling 0.71 of a cent to 91.36 cents (U.S.).

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U.S. indexes also made inroads as the Dow Jones industrials climbed 65.79 points to 16,323.73 after the U.S. Commerce Department reported that retail sales rose 0.2 per cent last month, higher than the 0.1 per cent increase that economists expected.

Other data showed that U.S. companies built up their stockpiles in November by 0.4 per cent as their sales improved. Continued growth in inventories suggests businesses believe consumers will increase spending in the months ahead.

The Nasdaq ran up 49.09 points to 4,162.4 and the S&P 500 index added 13.13 points to 1,832.33.

Markets sold off Monday on concerns about what the Federal Reserve may do about further cutting back on its key stimulus program and worries about whether the American equity markets are looking too expensive and that perhaps it's time for a correction.

"I think that a correction is appropriate and I wouldn't be surprised to see one", said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.

"We've two or three false starts to corrections, but they were very short-lived. You saw maybe one or two per cent corrections but that's not enough to bring real money back into the market that's been sidelined."

The S&P 500 rocketed about 30 per cent last year, helped in large measure by Fed stimulus. Investors now want to see if strong earnings and revenue can justify that gain and push stock prices higher.

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But Pashootan added that guidance is also very important for the quarter.

"If earnings are strong this season, it's not necessarily related to the next quarter because a lot of what you're seeing on this earnings announcement is a result of the economy improving over the last quarter and that's already priced into the market," he said.

On Tuesday, JPMorgan Chase shares were up 21 cents to $57.91 (U.S.) as the bank said quarterly net income came in at $5.3-billion, down from $5.7-billion a year earlier. Ex-items earnings per share were $1.40 versus the $1.35 that analysts had forecast.

Revenue fell one per cent to $24.1-billion, just above analysts' expectations of $23.9-billion.

Wells Fargo turned in fourth quarter earnings of $1 per share, two cents better than analysts had forecast. Revenue came in at $20.7, better than the $20.69 that had been expected but its shares, which have run up sharply over the last quarter, were off 46 cents to $45.09.

Corus Entertainment Inc. posted adjusted net income of C$55.2-million, or 65 cents a share, three cents higher than estimates. Revenue was $226-million, up from $209-million a year earlier and just short of estimates. Corus also said it is raising its dividend seven per cent and its shares jumped 61 cents to $25.20.

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Shaw Communications Inc. reports it had $245-million of net income, or 51 cents per share, in the quarter ended Nov. 30. That's up from $235-million or 50 cents per share a year earlier and two cents above analyst estimates. Shaw's revenue rose 3.3 per cent to $1.362-billion, beating estimates of $1.358-billion but its shares fell 43 cents to $24.88 as RBC Capital Markets noted that employee bonuses and programming costs weighed on margins.

March copper was down two cents at $3.33 (U.S.) a pound but the TSX base metals sector charged ahead 2.25 per cent as Bank of America/Merrill Lynch upgraded Thompson Creek Metals from underperform to buy. Its stock jumped 19 per cent to $2.82. Elsewhere in the sector, Teck Resources improved by 66 cents to $26.72.

The telecom sector advanced 1.3 per cent as bidding for a coveted piece of Canada's wireless market was to start today. The 700 megahertz waves are particularly valuable because they allow cellphone signals to travel longer distances and penetrate buildings and tunnels where calls are often dropped. Rogers Communications was the strongest performer in the group, ahead $1.27 to $48.31.

The gold sector edged up 1.1 per cent while February bullion drifted $1.40 higher to $1,252.50 (U.S.) an ounce. Iamgold climbed 23 cents to $4.39 while Kinross Gold was ahead five cents to $5.02.

The energy sector moved ahead 0.15 per cent while the February crude contract on the New York Mercantile Exchange gained 45 cents to $92.25 (U.S.) a barrel.

European bourses were weak as London's FTSE 100 index inched up 0.03 per cent,d Frankfurt's DAX was flat and the Paris CAC 40 gained 0.06 per cent.

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