North American stock markets opened mixed on Tuesday, as investors weighed the likelihood of further government stimulus with news of deteriorating economic and fiscal conditions in Europe.
In the U.S., there was some welcome positive economic news. The service sector expanded by slightly more than expected last month, according to the Institute for Supply Management's index of non-manufacturing businesses.
That ISM report follows news earlier in the day that Germany's services industry grew less than expected last month and that both services and manufacturing contracted in the broader euro zone during May.
In Toronto, the S&P/TSX gained 77.41 points to 11,413.18. Advancing stocks outpaced decliners by a ratio of almost three-to-one. All sectors were rising except for two traditionally defensive ones: telecom and consumer staples.
In New York, the gains weren't as widespread. The S&P 500 added 4.85 points, to 1,283.03. The Dow Jones industrial average rose 27.36 points to 12,128.82 points.
The Canadian dollar was almost unchanged, up by just 0.08 of a cent to 96.26 cents (U.S.). The Bank of Canada offered little to excite traders, leaving its main interest rate untouched at 1 per cent. But bank officials did change their tone on the economy after sounding increasingly bullish in April.
"The outlook for global growth has weakened in recent weeks," Governor Mark Carney and his rate-setting panel said in Ottawa. "Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in financial conditions."
The central bank voiced little concern about signs that the rebound in the United States is faltering, but it said emerging markets are "slowing a bit faster and a bit more broadly than had been expected."
The price of oil rose 35 cents, to $84.33 (U.S.) a barrel. But the dramatic drop in prices over the last couple of weeks could upset development of the Canadian oil sands. Some oil sands plants are nearing break-even levels, and the likelihood that low prices will persist is a matter of serious concern for Alberta's most important industry, international energy research firm Wood Mackenzie warned.
In Europe, Spain called for outside help as it struggles to control the country's emerging banking crisis. Finance ministers and central bank governors from Group of Seven countries plan to hold a call today to discuss the worsening situation in Europe. Germany is expected to come under strong pressure to replace its austerity program with one of greater stimulus.