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At the open: TSX rises with energy, bank shares; eyes 0.7% weekly gain

A file photo from the TMX Broadcast Centre in downtown Toronto in 2013.

Fernando Morales/The Globe and Mail

Canada's main stock index moved higher in early trade on Friday and was on track for a 0.7-per-cent gain for the week, with financial and energy shares leading a broad rise.

The Toronto Stock Exchange's S&P/TSX composite index was up 49.74 points, or 0.31 per cent, at 16,124.04 shortly after the open. All 10 main sectors were in positive territory.

The Canadian dollar strengthened slightly against its broadly weaker U.S. counterpart on Friday, as U.S. crude prices extended gains at a two-year high while widening bond yield spreads weighed on the loonie in holiday-affected trade.

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The currency had slipped from a 10-day high on Thursday after tepid retail sales data, but the market could look past that if oil, a major Canadian export, keeps pushing higher and a quarterly economic growth report due next week beats central bank forecasts, according to TD Securities' North American head of foreign exchange strategy Mark McCormick.

U.S. crude prices were up 1.28 per cent at $58.76 a barrel, while Brent added 0.19 per cent to $63.67, with the North American markets tightening on the partial shutdown of a pipeline linking Canada with the United States.

At 9:21 a.m. ET, the Canadian dollar was trading at $1.2716 to the greenback, or 78.64 U.S. cents, up 0.03 per cent.

The currency's strongest level of the session was $1.2702, while its weakest level was $1.2747.

TD's McCormick said the Canadian currency would face resistance at $1.2732 and would need to push below $1.2675 in the next few days to confirm a strengthening bias.

The Canadian dollar was lower against the euro and British pound but gained against the Japanese yen.

Canadian government bond prices were lower across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 1.445 per cent and the benchmark 10-year 2 Canadian cents lower to yield 1.896 per cent.

The Canada-U.S. two-year bond spread widened half a basis point to -29.9 basis points, while the 10-year spread widened 1 basis point to -43.9 basis points.

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The S&P 500 and Nasdaq Composite hit record highs at the open on Friday, a day after the Thanksgiving holiday, climbing with oil prices and with retail stocks in focus as Black Friday kicks off the holiday shopping season.

The Dow Jones Industrial Average rose 28.33 points, or 0.12 per cent, to 23,554.51. The S&P 500 gained 4.53 points, or 0.17 per cent, to 2,601.61. The Nasdaq added 9.19 points, or 0.13 per cent, to 6,876.55.

While Black Friday is typically the busiest day of the year for U.S. retailers, the stock market is likely to be relatively quiet, with an early close at 1:00 p.m. ET.

By Thanksgiving evening, U.S. shoppers had splurged more than $1.52-billion online, a 16.8-per-cent jump over the same period last year, according to Adobe Analytics.

Surging online sales have eaten into the business of brick-and-mortar retailers, which get as much as 40 per cent of their annual sales during the holiday shopping season.

Shares of Macy's, Kohl's, Wal-Mart and Target were up between 0.5 per cent and 3 per cent in early trading. Their biggest rival, Amazon, was up 0.7 per cent.

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J.C. Penney rose 2.9 per cent, while electronics retailer Best Buy was down 0.3 per cent.

"Retail spending and online shopping news is looking good, spurring hopes for strong retail sales," said Peter Cardillo, chief market economist at First Standard Financial.

"Today's abbreviated session is poised to move higher as focus on shopping and climbing oil prices are the key market movers of the day."

U.S. stocks have been hovering near record levels, with the benchmark S&P 500 up about 16 per cent so far this year, helped by strong earnings, an improving economy and hopes of tax cuts by the Trump administration.

Despite a tepid Wednesday, the S&P and the blue-chip Dow Jones Industrial Average are up 0.7 per cent so far this week and, barring a sell off, are set to end higher for the first time in three weeks.

World stocks hovered below record highs on Friday, set to reverse two straight weeks of losses while the euro hit its highest levels in six weeks following stronger than expected economic data this week.

The MSCI World Index, which tracks shares in 47 countries, rose 0.1 per cent and is set for gains of more than 1 per cent this week. Its climb was underpinned by gains in Europe and Asia. The pan-European STOXX 600 index was up almost half a percent by midday in London.

Along with surveys this week that showed Europe's services and manufacturing industries outshining the most optimistic forecasts in Reuters polls, the growing prospect of a grand coalition in Germany boosted sentiment around European equities.

Germany's Social Democrats are ready to hold talks with other parties on breaking a political deadlock created by Chancellor Angela Merkel's failure to form a three-way coalition government, a senior member of the center-left party said.

"There's a lot of impetus there to resolve the situation without recourse to another election," Ken Odeluga, market analyst at City Index, said, adding that an easing in the euro's ascent was also supportive of German equities.

The euro touched its highest point in six weeks at $1.1875, up 0.1 per cent on the day and on track to mark its third consecutive week of gains.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent, as Hong Kong shares bucked the softness in mainland Chinese shares to gain 0.6 per cent.

Stocks in mainland China dropped to three-month lows after big falls the previous day on concerns about fresh government steps to curb financial risks and rise in Chinese bond yields.

Japan's Nikkei ended up 0.1 per cent after a market holiday on Thursday, while U.S. stock futures were little changed after shortened trading on Thursday.

In the currency market, the U.S. dollar remained under pressure after minutes from the U.S. Federal Reserve's latest policy meeting highlighted concern among some of the board members over persistently low inflation.

The index that measures the greenback against a basket of peers was 0.2 per cent lower.

A weaker dollar saw the British pound staying near a six-week high, poised to post gains for a third consecutive week as markets interpreted the latest comments from top EU policymakers as mildly positive for Brexit negotiations, though gains were capped.

Although solid global economic growth and strong corporate earnings have underpinned shares in Asia and many other parts of the world, a tumble in mainland Chinese shares caught some investors' attention.

The CSI300 index fell as much as 0.9 per cent to a three-month low in choppy trade after a 3.0-per-cent fall - its biggest in almost a year-and-a-half - on Thursday, as a sell-off in domestic bonds that has been under way since last month gnawed away at investor sentiment.

In late trade, the index was almost flat.

Investors were also reacting to new policies aimed at curbing micro-lending and tightening regulation of asset management businesses.

The start-up board Chinext Index hit its lowest level since mid-August and last stood down 0.3 percent, ahead of a potential swell in sales of small shares in the next couple of months from institutional investors after their IPO (Initial Public Offering) lock-up period ends.

Earlier this month Chinese stocks had risen almost 15 per cent from their lows hit in May, and analysts said some investors were selling to lock in profits.

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