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Canadian Stocks Are Paring Early Gains- Canadian Commentary

The Canadian stock market opened sharply higher Monday, but has since given back some of its early gains. Global markets are rallying at the start of the week as investors react positively to the news that U.S. President Trump and Chinese President Xi agreed to a 90-day truce in the escalating trade war between the two countries over the weekend.

A White House statement said Trump agreed not to raise the tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent on January 1st as planned.

In return, China agreed to purchase a "not yet agreed upon, but very substantial, amount" of agricultural, energy, industrial, and other product from the U.S.

Markets in Europe are trading solidly in the green Monday. Automakers are performing well after China agreed to slash auto import tariffs.

Markets on Wall Street are rallying at the start of the new trading week.

The benchmark S&P/TSX Composite Index is up 63.34 points or 0.42 percent at 15,261.16.

On Friday, the index closed up by 3.78 points or 0.02 percent, at 15,197.82. The index scaled an intraday high of 15,214.25 and a low of 15,197.82.

The Energy Index is rising 3.66 percent. Cenovus Energy (CVE.TO) is increasing 7.74 percent and Canadian Natural Resources (CNQ.TO) is climbing 8.72 percent. Crescent Point Energy (CPG.TO) is gaining 8.38 percent and Suncor Energy (SU.TO) is advancing 0.72 percent. Encana (ECA.TO) is up 2.46 percent and Enbridge (ENB.TO) is adding 0.32 percent.

The Capped Information Technology Index is gaining 0.67 percent. Descartes Systems Group (DSG.TO) is climbing 0.64 percent and BlackBerry (BB.TO) is advancing 0.60 percent. Constellation Software (CSU.TO) rising 0.78 percent and Sierra Wireless (SW.TO) is up 1.40 percent.

The Gold Index is increasing 0.27 percent. IAMGOLD (IMG.TO) is up 1.99 percent and Yamana Gold (YRI.TO) is advancing 2.53 percent. B2Gold (BTO.TO) is gaining 0.76 percent and Eldorado Gold (ELD.TO) is higher by 1.32 percent. Kinross Gold (K.TO) is rising 0.97 percent.

The heavyweight Financial Index is increasing 0.15 percent. Royal Bank of Canada (RY.TO) is advancing 0.45 percent and Bank of Nova Scotia (BNS.TO) is rising 0.51 percent.

The Capped Telecommunication Services Index is down 0.49 percent. TELUS (T.TO) is losing 0.42 percent and BCE (BCE.TO) is lower by 0.60 percent. Rogers Communications (RCI-B.TO) is falling 0.35 percent.

Canopy Growth Corporation (WEED.TO) is falling 3.48 percent after it announced that it has entered into two agreements with 48North Cannabis Corp. (TSXV: NRTH) a strategic investment financing and partnership and a supply agreement. Under the Supply Agreement, 48North will supply Canopy Growth with dried cannabis grown at 48North's wholly-owned facility, DelShen Therapeutics Corp.

Equitable Group Inc. (EQB.TO) is rising 0.79 percent after it announced it has reached an agreement to acquire Bennington Financial Services Corp, a profitable and growing privately owned company serving the brokered equipment leasing market in Canada.

Canadian Pacific Railway (CP.TO) is down 0.30 percent after it announced that it has reached a tentative, four-year agreement with Unifor.

On the economic front, the manufacturing sector in China accelerated slightly in November, the latest survey from Caixin revealed on Monday with a manufacturing PMI score of 50.2. That exceeded expectations for a score of 50.1, which would have been unchanged from the October reading.

Eurozone's manufacturing growth slowed less-than-expected in November, amid marginal growth in output and weak business confidence, and was the lowest since August 2016, final data from IHS Markit showed on Monday.

The manufacturing purchasing managers' index fell to 51.8 from 52 in October. The flash reading was 51.5.

UK manufacturing growth improved in November, but activity remained subdued amid a second consecutive month of decline in export orders, though domestic demand increased as Brexit worries prompted clients to stock up on supplies.

The CIPS manufacturing purchasing managers index rose to 53.1 from October's 27-month low of 51.1, survey data from IHS Markit showed on Monday. Economists had forecast a score of 51.7.

Manufacturing activity in the U.S. unexpectedly grew at a faster rate in the month of November, according to a report released by the Institute for Supply Management on Monday.

The ISM said its purchasing managers index climbed to 59.3 in November after falling to 57.7 in October, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to edge down to 57.5.

With a drop in spending on private construction more than offsetting an increase in spending on public construction, the Commerce Department released a report on Monday showing an unexpected dip in U.S. construction spending in the month of October.

The Commerce Department said construction spending edged down by 0.1 percent to an annual rate of $1.309 trillion in October after slipping by 0.1 percent to a downwardly revised rate of $1.311 trillion in September.

The modest decrease came as surprise to economists, who had expected construction spending to rise by 0.3 percent compared to the nearly unchanged reading originally reported for the previous month.

In commodities, crude oil futures for January delivery are up 1.78 or 3.49 percent at $52.71 a barrel.

Natural gas for January is down 0.245 or 5.31 percent at $4.367 per million btu.

Gold futures for February are up 12.30 or 1.00 percent at $1,238.30 an ounce.

Silver for January is up 0.376 or 2.67 percent at $14.47 an ounce.

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