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The screens at the TMX Broadcast Centre in Toronto show the closing numbers of the TSX on Tuesday, July 3, 2012. (Matthew Sherwood For The Globe and Mail)
The screens at the TMX Broadcast Centre in Toronto show the closing numbers of the TSX on Tuesday, July 3, 2012. (Matthew Sherwood For The Globe and Mail)

The close: Commodities drive TSX to best gain of 2013 Add to ...

Commodity producers gave Canada’s benchmark index its biggest gain of the year on Tuesday, as investors embraced lower Chinese inflation and looked beyond a credit-rating downgrade.

The S&P/TSX composite index closed at 12,484.05, up 139.49 points or 1.1 per cent – marking its biggest percentage gain since mid-November.

In the United States, the S&P 500 closed at 1568.61, up 5.54 points or 0.4 per cent. The blue-chip Dow Jones industrial average closed at 14,673.46, up 59.98 points or 0.4 per cent. That topped its all-time closing high of 14,662.01 from a week ago.

The gains followed a report showing that China’s inflation rate eased more than forecast in March, which sent commodity producers on a tear.

However, investors also looked beyond a credit downgrade for China: Fitch Ratings lowered its rating on China’s long-term local-currency bonds, to AA-minus from A-plus, pointing to rising financial risks in the fast-growing economy.

Within Canada’s benchmark index, materials surged 2.3 per cent and energy stocks rose 2 per cent – an impressive rebound for two areas of the Canadian market that had been dragging on performance.

While the Dow and the S&P 500 have recently hit record highs, Canada’s S&P/TSX composite index has been stuck in a fairly tight trading range for the past three years.

Commodities themselves showed far tamer moves. The Thomson Reuters/Jefferies CRB index rose just 0.6 per cent. Crude oil rose to $94.17 (U.S.) a barrel, up 81 cents. Gold rose to $1,584.60 an ounce, up $12.10.

Suncor Energy Inc. rose 3.1 per cent and Barrick Gold Corp. rose 1.5 per cent.

Agrium Inc. fell 2.8 per cent after activist investor Jana Partners LLC lost a proxy vote to shift the direction of the fertilizer producer with its own slate of directors.

In the U.S., Alcoa Inc. ended the day unchanged, after reporting first-quarter earnings on Monday evening that topped analysts’ expectations. The company’s sales missed expectations.

J.C. Penney Co. Inc. fell 12.2 per cent after its chief executive, Ron Johnson – the former Apple Inc. executive who was seen as the clothing retailer’s biggest hope for a turnaround – was ousted.

Herbalife Ltd. fell 3.8 per cent after KPMG resigned as the firm’s auditor, announcing that it had fired a partner over alleged disclosure of insider information. The company has had a high profile since late last year, when hedge fund manager Bill Ackman made a public presentation on why he thought the shares would fall to zero.

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