The Toronto stock market rose sharply Thursday as economic indicators from the United States remained gloomy but earnings reports from Canadian companies came up rosy.
The benchmark S&P/TSX Composite Index closed up 220 points to 10,921, a gain of 2.1 per cent, led higher by commodity stocks and financials.
Montreal-based Laurentian Bank climbed 4.7 per cent to $37.93 after it announced better-than-expected earnings for the third quarter of 2008, ending July 31. Canadian Western Bank also beat analysts' expectations for its quarterly profit report and registered a 4.3 per cent gain to $18.36.
Shares in Nexen Inc. were ahead 95 cents to $21.90 on the TSX after the Calgary-based oil and gas company said it has made a "substantial" discovery of additional North Sea resources in the Golden Eagle area. Nexen estimated Golden Eagle contains the equivalent of between 150 million and 275 million barrels of oil.
Lukewarm U.S. figures
The rally in Toronto seemed to shrug off tepid economic and financial data from south of the border.
New U.S. jobless claims fell slightly last week while the number of people receiving unemployment benefits rose, the U.S. Labor Department said Thursday. The number of laid-off American workers applying for benefits dipped to 570,000 last week from an upwardly revised 574,000, but that was still a weaker performance than the drop to 560,000 claims that economists had expected.
Economists closely watch new jobless claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.
The U.S. economy's service sector inched closer to growth in August, but still shrank for the 11th straight month in the face of weak consumer spending. The Institute for Supply Management said Thursday that its service index, which covers hospitals, retailers, financial services companies and more and tracks more than 80 per cent of the country's economic activity, came in at 48.4, up from 46.4 in July.
It was the best reading in 11 months and beat the estimates of a 48 from economists polled by Thomson Reuters. Still, any reading below 50 indicates the service sector is shrinking.
In New York the Dow, Nasdaq and S&P 500 were all higher. Profits were down from last year at Costco and the Gap, nevertheless better-than-expected results saw shares of the U.S. retailers advance 8.6 per cent and 7.6 per cent, respectively.
Market optimism will be tested on Friday when the U.S. government releases its non-farm payrolls report for August. Economists expect the report to show another 275,000 American job losses last month. With files from The Canadian Press and The Associated Press