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Canada’s main stock index rose at open on Wednesday led by gains in energy and financial stocks.

The Toronto Stock Exchange’s S&P/TSX Composite index was up 12.48 points, or 0.08 per cent, at 16,301.46.

The Canadian dollar edged higher against its U.S. counterpart on Wednesday, with the currency recovering from an earlier one-week low ahead of an expected interest rate hike by the Federal Reserve.

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The Canadian dollar was trading 0.1 per cent higher at $1.2994 to the greenback, or 76.96 U.S. cents. The currency touched its weakest level since June 5 at $1.3046.

Traders’ expectations for a Fed rate hike on Wednesday were reinforced by a stronger-than-forecast increase in U.S. producer prices in May. It would be the second tightening this year by the U.S. central bank.

The Bank of Canada has also raised interest rates once this year. Chances of another hike at its next meeting in July have eased to about 62 per cent from more than 70 per cent before a G7 summit in Canada at the weekend, data from the overnight index swaps market showed.

U.S. President Donald Trump backed out of a joint communique agreed by Group of Seven leaders that mentioned the need for “free, fair and mutually beneficial” trade and the importance of fighting protectionism.

He also attacked Canadian Prime Minister Justin Trudeau in their feud over trade.

The spat comes amid slow-moving talks between Canada, the United States and Mexico to modernize the North American Free Trade Agreement (NAFTA). Canada sends about 75 percent of its exports to the United States, so its economy could be hurt if NAFTA were scrapped.

U.S. crude oil futures were down 0.5 per cent at $66.02 a barrel. Oil is one of Canada’s major exports.

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U.S. stock indexes opened little changed on Wednesday as gains in healthcare stocks offset losses in AT&T, whose $85 billion takeover of Time Warner was approved by a court.

The Dow Jones Industrial Average rose 7.92 points, or 0.03 per cent, at the open to 25,328.65. The S&P 500 opened higher by 1.09 points, or 0.04 per cent, at 2,787.94. The Nasdaq Composite gained 10.11 points, or 0.13 per cent, to 7,713.90 at the opening bell.

Time Warner jumped 3.6 per cent in early trading after the landmark ruling, which is expected to trigger a wave of corporate mergers. AT&T dropped 4.3 per cent in busy trade before the opening bell.

Twenty-First Century Fox surged 7.5 per cent as Comcast Corp is expected to outbid Disney for some of its assets as early as Wednesday. Sprint, which is looking to merge with T-Mobile, was also up 2 per cent.

“(The ruling) sounds like it opened the door for consolidation, which should excite investors in that space,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

Investors are awaiting the Fed’s decision on monetary policy at 2:00 p.m. ET. With this year’s second interest rate hike almost certain, market participants will look for signals on whether the Fed will move to raise rates three or four times this year.

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“Market pricing is fairly split between three and four hikes this year, so it probably doesn’t require a hawkish signal to correct a mispricing,” Deutsche Bank strategist Jim Reid wrote in a note to clients.

Investors are focused on how the Fed characterizes its monetary policy as borrowing costs return to more normal levels amid an ongoing economic expansion. Fed Chair Jerome Powell holds a news conference after the decision.

A Labor Department report on Wednesday showed U.S. producer prices increased more than expected in May, leading to the biggest annual increase in nearly 6-1/2 years, but underlying producer inflation remained moderate.

Reuters

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