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TMX Group Inc. signage is displayed on a screen in the broadcast center of the Toronto Stock Exchange (TSX) in Toronto, Ontario, Canada, on Monday, Oct. 31, 2011. A takeover of Toronto Stock Exchange owner TMX Group Inc. by a group of Canadian banks and pension funds is "significantly" more likely to succeed after TMX's board endorsed the C$3.73 billion ($3.73 billion) offer, analysts said. Photographer: Norm Betts/Bloomberg

Norm Betts/Bloomberg

The Toronto stock market was slightly higher Tuesday with traders hopeful an agreement can be reached to end a U.S. budget crisis that threatens to end in the country defaulting on its debts.

The S&P/TSX composite index gained 20.16 points to 12,808.41, with leadership coming from the gold sector even as gold prices slipped slightly.

Talisman Energy (TSX:TLM) (NYSE:TLM) was in focus after activist U.S. investor Carl Icahn disclosed Monday that he has bought more than 61.5 million shares of the Calgary-based energy giant for a 5.97 per cent stake. Its shares were up a penny to $13.16 on the TSX, on top of a 4.8 per cent advance Monday.

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Icahn tweeted that he "may have conversations with management about strategic alternatives and board seats."

The Canadian dollar was down 0.09 of a cent to 96.87 cents US amid data showing a modest uptick in housing starts last month and an increase in the trade deficit.

Canada Mortgage and Housing Corp. said that starts came in at 193,637 units in September, up from 183,964 in August.

And Statistics Canada says the trade deficit grew in August to $1.3-billion from $1.2-billion. The rise came as Canada's imports grew 2.1 per cent in August while exports rose 1.8 per cent.

U.S. indexes added to sharp declines chalked up on Monday, with the Dow Jones industrials down 28.74 points to 14,907.5, the Nasdaq off 10.19 points at 3,760.19 and the S&P 500 index giving back 2.86 points to 1,673.26.

A partial shutdown of the U.S. government is in its second week after lawmakers failed to agree on funding. Now, traders are increasingly worried that the two sides won't be able to come to a spending agreement before Oct. 17 when the government runs out of money to pay its bills.

The telecom sector was the biggest decliner. Manitoba Telecom Services (TSX:MTS) fell $3.18, or almost 10 per cent, to $29.18 after the federal government rejected a deal that would have seen its business unit, Allstream, sold to Egyptian investment group Accelero Capital Holdings. It said the government cited "unspecified national security concerns" for the decision.

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The Winnipeg company said Monday it was "extremely surprised and disappointed" by the decision to not approve the deal, which was announced last May. At the time, the company valued the sale at $520-million.

Commodity markets were mixed with the December gold bullion contract off $1.60 to US$1,323.50 an ounce. The gold sector gained 0.55 per cent and Centerra Gold (TSX:CG) climbed seven cents to C$4.87.

The energy component improved by 0.36 per cent while the November crude contract on the New York Mercantile Exchange was up 76 cents to US$103.79 a barrel. Canadian Natural Resources (TSX:CNQ) was ahead 38 cents to C$32.56.

Techs were also supportive with BlackBerry (TSX:BB) up nine cents to $8.29.

The base metals group was off 0.1 per cent as December copper gained two cents to US$3.32 a pound. First Quantum Minerals (TSX:FM) dropped 20 cents to C$17.74.

Elsewhere on the corporate front, resource giant Alcoa Inc. reports quarterly earnings after the close.

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European bourses were in the red with London's FTSE 100 index down 0.8 per cent, Frankfurt's DAX off 0.2 per cent and the Paris CAC 40 down 0.4 per cent.

Earlier in Asia, Japan's Nikkei index closed up 0.3 per cent, while Hong Kong's Hang Seng index rose 0.9 per cent. China's Shanghai composite, reopening for the first time since closing for public holidays on Oct. 1, climbed 1.1 per cent.

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