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TSX Ends Higher On Upbeat Economic Data - Canadian Commentary

Canadian stocks settled higher Thursday, on some upbeat global macroeconomic data including some encouraging Chinese manufacturing growth and an unexpected fall in U.S. unemployment benefit claims. The upsurge of the index was checked to some extent by a drop in gold stocks with prices of the precious metal falling sharply on the New York Mercantile Exchange. Investors also digested the news of the suspension of U.S. debt ceiling until May that enabled avert a potential default.

First-time claims for U.S. unemployment benefits fell unexpectedly and a flash estimate showed Germany's private sector expanded at the fastest pace in a year underpinned by strong services activity. Elsewhere, Chinese manufacturing growth hit a two-year high this month.

The S&P/TSX Composite Index closed Thursday at 12,823.62, up 29.57 points or 0.23 percent. The index touched an intraday high of 12,863.47 and a low of 12,794.05.

The Global Gold Index plunged 2.56 percent, with gold futures for February delivery dropping $16.80 or 1.0 percent to close at $1,669.90 an ounce Thursday on the Nymex.

The Capped Materials Index dropped 1.34 percent, even as Potash Corporation of Saskatchewan Inc. (POT.TO) gained 1.74 percent.

Among gold stocks, Barrick Gold Corp. (ABX.TO) was down 1.85 percent, while Kinross Gold Corp. (K.TO) lost 5.06 percent. Yamana Gold Inc. (YRI.TO) shed 4.15 percent, while Goldcorp. Inc. (G.TO) dropped 2.23 percent.

Iamgold Corp. (IMG.TO) plunged 4.45 percent. The company had provided a weak production guidance for 2013 yesterday.

The Diversified Metals & Mining Index shed 0.81 percent, with Teck Resources Limited (TCK.B.TO) up 0.88 percent and Lundin Mining Corp. (LUN.TO) up 0.19 percent.

First Quantum Minerals Ltd. (FM.TO) gained 0.34 percent. The company had made an hostile bid to acquire Inmet Mining Corp. (IMN.TO). Inmet Mining slipped 4.45 percent.

The U.S. Energy Information Administration's weekly crude oil report showed crude oil stockpile in the country increased by 2.80 million barrels to 363.10 million barrels last week, while analysts expected crude oil inventories to rise 2.00 million barrels for the week. Total motor gasoline inventories moved down by 1.70 million barrels last week, while analysts estimated gasoline stocks to increase 1.60 million barrels last week.

The Energy Index gained 0.70 percent, with U.S. crude oil futures for March delivery up $0.72 or 0.8 percent, to close at $95.95 a barrel Thursday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) moved up 0.44 percent, while Encana Corp. (ECA.TO) gained 1.50 percent. Canadian Natural Resources Limited (CNQ.TO) gathered 1.62 percent.

The Financial Index gained 0.39 percent, with TD Bank Group (TD.TO) up 0.60 percent, the Bank of Nova Scotia (BNS.TO) gathered 0.50 percent, and Bank of Montreal (BMO.TO) shed 0.20 percent. Royal Bank of Canada (RY.TO) moved up 0.59 percent.

The Capped Industrials Index gained 0.88 percent with transportation systems maker Bombardier Inc. (BBD.A.TO, BBD.B.TO) shedding 0.97 percent and Canadian Pacific Railway (CP.TO) gaining 2.14 percent.

The Information technology Index gained 1.91 percent, with Blackberry maker Research In Motion (RIM.TO) gaining 2.89 percent.

Fertilizer maker Agrium Inc. (AGU.TO) moved up 2.94 percent after lifting its fourth quarter earnings outlook to slightly above $2.00 per share from its earlier earnings guidance of $1.50 to $1.90 per share on a comparable basis. Analysts expect the company to report earnings of $1.73 per share for the fourth-quarter.

In economic news, a U.S. Labor Department report showed initial jobless claims to have dipped to 330,000, a decrease of 5,000 from the previous week's unrevised figure of 335,000. The drop was a surprise, as economists expected jobless claims to climb to 355,000.

The Conference Board said its leading economic index rose by 0.5 percent in December after coming in unchanged in November. Economists had expected the index to increase by about 0.4 percent. This would suggest a pickup in domestic growth now more likely than a few months ago.

In economic news from the eurozone, Germany's private sector expanded at the fastest pace in a year underpinned by strong services activity, flash estimate from Markit Economics showed. The Composite Output Index came at 53.6 in January, up from 50.3 in December. A reading above 50 suggests expansion in the private sector. The Purchasing Managers' Index for services climbed to a 19-month high of 55.3, up from 52 in December. The reading was forecast to remain unchanged at 52.

The euro area private sector activity contracted in January, but at a slower than expected pace, survey data from Markit Economics showed. The composite output index rose to a 10-month high of 48.2 in January from 47.2 in December. Economists had forecast the reading to rise to 47.5.

Separately the eurozone current account surplus increased to 14.8 billion euros in November from 8 billion euros in October, a European Central Bank report showed.

Elsewhere, China's manufacturing sector activity rose to its highest level in two years in January as factory production picked up momentum, preliminary results of a survey by Markit Economics showed. The headline HSBC/Markit purchasing managers' index rose to 51.9 in January from 51.5 in December. A PMI reading above 50 indicates expansion of the sector.

by RTTNews Staff Writer

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