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At midday: TSX reverses course as miners gain

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 201

Mark Blin/Reute

Canada's main stock index reversed early losses on Wednesday as mining stocks climbed with commodity prices.

The index fell at the open after a robust U.S. inflation report weighed on investor sentiment.

U.S. consumer prices rose at a faster-than-expected rate in January, raising concerns that the Federal Reserve will accelerate its timetable to raise interest rates this year.

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At 11:17 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was up 55.15 points, or 0.36 per cent, to 15,270.86.

The materials group, which includes precious and base metals miners, added 2.4 per cent. The prices of gold, silver and copper posted strong gains. Barrick Gold Corp advanced 3 per cent to $17.14, and Goldcorp Inc rose 4.1 per cent to $16.64.

The energy group rose 0.5 per cent. Seven Generations Energy Ltd. jumped 5.4 per cent to $16.03, while Encana Corp. was up 2.8 per cent to $13.77.

One of the largest percentage gainer on the exchange was Colliers International, which rose 10.1 per cent to $82.60. The largest decliner was Crew Energy, down 2.2 per cent to $1.76..

Canopy Growth Corp. rose 3.6 per cent to $27.66 after releasing better-than-anticipated quarterly results.

U.S. stocks reversed course to trade marginally higher on Wednesday as investors digested stronger-than-expected inflation data and a surprise drop in January retail sales, which shifted the focus from rising inflation to the prospect of stagflation.

The Labor Department's core Consumer Price Index, which excluded the volatile food and energy components, increased 0.3 per cent in January. Economists polled by Reuters had forecast an increase of 0.2 per cent. However, the year-on-year rise was unchanged at 1.8 per cent.

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The CPI data again raised the specter of rising inflation and rekindled fears that the Federal Reserve could be forced to be more aggressive with monetary policy.

However, data showed U.S. retail sales fell 0.3 per cent last month, the biggest decline in nearly a year and a surprise drop compared with economists' estimates of a 0.2-per-cent increase.

U.S stock futures fell more than 1 per cent after data was released at 8:30 a.m. ET. An hour later, the stock market opened a third of a percent lower and has slowly pared losses since.

"The initial reactions were amplified. We took a big dive in equity markets and now, as we digest the numbers a little bit further, people are starting to calm down," said Jim Smigiel, head and chief investment officer of Absolute Return Strategies at SEI Investments in Philadelphia.

"The number suggests the notion of stagflation, higher than expected inflation numbers and weaker than expected consumption which is a negative growth in the United States. That's not the narrative that the plethora of data really supports."

The Dow Jones Industrial Average rose 0.1 per cent to 24,664.07. The S&P 500 gained 0.35 per cent to 2,672.2 and the Nasdaq Composite was up 0.82 per cent at 7,071.13.

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"I think the market is trying to find a bottom here. The market is not looking for any serious downleg from where we are today," Smigiel added.

Benchmark U.S. 10-year Treasury yields were near their session highs, but a key measure of near-term volatility fell, in contrast to its reaction to strong U.S. jobs and wages data earlier in the month.

The CBOE Volatility index was down at 21.10 points, slipping below 20 for the first time since Feb. 5 and well off the 50-point mark it hit during last week's sell-off.

Seven of the 11 major S&P 500 sectors were higher. The losers included the typically defensive sectors: consumer staples, utilities and real estate .

Among stocks, Fossil rose 55.7 per cent after short-sellers rushed to cover their positions, a day after the watchmaker posted strong holiday-quarter sales.

Chipotle jumped about 14.3 per cent after it hired Brian Niccol from Taco Bell as its next chief executive, which analysts said sparked hopes of a quicker turnaround.

Oil prices rose on Wednesday, rebounding from earlier losses after U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major oil producers would prefer tighter markets than to end supply cuts too early.

U.S. crude inventories rose 1.8 million barrels last week, Energy Information Administration (EIA) data showed compared with expectations for an increase of 2.8 million barrels. Crude stocks fell again at the Cushing, Okla. storage hub, and have been cut in half since early November.

Refining rates fell as U.S. refiners reduce activity for seasonal maintenance. Gasoline inventories, however, rose 3.6 million barrels, more than expected.

"Refiners continue to process significantly more crude oil than they have in the past, resulting in higher production of gasoline which is leading to higher product inventories," said Andrew Lipow, president of Lipow Oil Associates in Houston.

Brent crude futures rose 34 cents to $63.06 a barrel. U.S. West Texas Intermediate crude futures gained 17 cents to $59.37 a barrel.

The market bounced around earlier, losing ground after stronger-than-expected U.S. inflation figures that boosted the dollar. Oil tends to move in the opposite direction of the dollar, and has been trading in tandem with risk assets like stocks of late.

However, the market recovered after the Saudi oil minister said the Organization of the Petroleum Exporting Countries would rather leave the oil market slightly short of supplies rather than ending too early a deal on cutting output.

OPEC and its partners, including Russia, have curbed supply since January 2017 in a bid to drain global inventories in an agreement that continues through the end of the year. There has been concern about that deal's efficacy due to the sharper-than-expected increase in U.S. production.

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