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The Globe and Mail

At the open: Stocks edge up but jobs data refuel ‘taper’ talk

Traders work on the floor at the New York Stock Exchange, July 24, 2013.

Brendan McDermid/Reuters

The Toronto stock market was higher Friday amid jobs data in Canada and the U.S. that breezed past expectations.

The S&P/TSX composite index gained 22.21 points to 13,316.41.

The loonie was down 0.33 of a cent to 95.26 cents US after Statistics Canada reported that the economy created 13,200 jobs last month while the jobless rate held steady at 6.9 per cent. Economists had expected that about 11,000 jobs would be created.

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The greenback was sharply higher after the U.S. Labor Department reported that the economy cranked out 204,000 jobs, far above the approximately 120,000 reading that was expected.

But the data translated into only modest gains for U.S. indexes as it raised concerns that the Federal Reserve will think the economy is strengthening to a point where it can start winding up its US$85 billion of monthly bond purchases. That stimulus program has supported a strong rally on markets.

The Dow Jones industrials rose 25.01 points to 15,618.99, the Nasdaq climbed 21.89 points to 3,879.23 and the S&P 500 index were ahead 5.25 points to 1,752.4.

The jobless rate ticked up 0.1 of a point to 7.3 per cent, reflecting the huge temporary layoffs that resulted from the partial U.S. government shutdown during early October.

Economists had pointed out that the employment report would likely be distorted somewhat by the shutdown. Almost half a million federal workers were furloughed during the shutdown and many thousands of other private sector workers who rely on federal contract work were also affected.

The strong employment data came out a day after a better than expected reading on third quarter U.S. economic growth also raised worries that the Fed could start to taper as soon as the end of December.

It was a relatively quiet day on the earnings front where Air Canada (TSX:AC.B) posted adjusted net income rose of $365 million, an increase of nearly 60 per cent compared with that same time last year. The adjusted earnings amounted to $1.29 per share, which was 26 cents per share above analyst estimates of $1.03 per share. Under standard accounting, Air Canada had $299 million or $1.05 per share of net income, also above estimates but down from last year. Its shares surged 54 cents or 9.66 per cent to $6.13 after hitting a fresh, 52-week high of $6.19, highs not seen since before the 2008 recession.

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Telus Corp. (TSX:T) rose 20 cents to $36.48 as the telecom reported its adjusted profit jumped to $365 million in the third quarter, up 13 per cent from a year earlier. On a per-share basis, Telus had 58 cents per share of adjusted earnings, two cents better than the estimate. Revenue was up 3.6 per cent from last year, rising to $1.87 billion.

The gold sector led decliners, down 2.4 per cent as bullion prices fell sharply on speculation the Fed could start winding up bond purchases and the December bullion contract was $17.80 lower to US$1,290.70 an ounce. Goldcorp (TSX:G) fell 50 cents to C$25.01.

The metals and mining sector fell 1.2 per cent with December copper down two cents to US$3.23 a pound. Capstone Mining (TSX:CS) slipped seven cents to $2.66.

December crude on the New York Mercantile Exchange edged up 39 cents to US$94.59 a barrel and the energy sector rose 0.4 per cent.

There was also major acquisition activity in the resource sector as Talisman Energy Inc. (TSX:TLM) reached a deal to sell its interests in two B.C. natural gas partnerships for $1.5 billion in cash. The buyer is Progress Energy Corp., a formerly independent Canadian company that's now a subsidiary of Malaysia's state-owned Petronas.

Talisman has said for months that it planned to sell a large chunk of its assets in order to be more efficient and profitable. Its shares ran up 27 cents to $12.49.

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European indexes declined with London's FTSE 100 index down 0.61 per cent, Frankfurt's DAX lost 0.7 per cent and the Paris CAC 40 dropped 1.18 per cent.

Asian markets closed lower. Japan's Nikkei 225 sank one per cent, Seoul's Kospi dropped one per cent, Hong Kong's Hang Seng slid 0.6 per cent and in mainland China, the Shanghai Composite fell 1.1 per cent.

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