ABC Finance

A surge in energy stocks from record-high oil prices helped send the Toronto stock market higher on today.

New York markets weakened on the latest jump in energy prices while investors also fretted over a downbeat Federal Reserve assessment of the economy and efforts by troubled bond insurer Ambac Financial Group Inc. to maintain its "AAA" rating.

The Toronto market rose 126.51 points to 13,603.32 after rising about 170 points during the morning.

"Right now, we're performing reasonably well because oil is up," said John Stephenson, portfolio manager at First Asset Funds.

"But I think it's totally amazing that we've managed to shrug off what appears to be an enormous pink elephant in the trading room – the housing/credit implosion south of the border and it ain't looking great."

The TSX Venture Exchange climbed 51.31 points to 2,803.34.

Oil prices surging $5 a barrel helped push the Canadian dollar up 0.94 cent to 101.43 cents – after running up as high as 101.68 cents US – a day after the Bank of Canada cut its key interest rate by half a point to 3.5 per cent.

New York's Dow Jones industrials were up about 100 points during the morning on economic data and earnings news and closed up 41.19 points to 12,254.99.

The Nasdaq composite index climbed 12.53 points to 2,272.81 while the S&P 500 gained 6.95 points to 1,333.7.

Ambac said it plans to issue more than US$1 billion in common stock to help shore up its battered balance sheet. Investors had hoped for a contribution from global banks to help Ambac, whose plan will dilute its outstanding shares.

The Fed confirmed what many already strongly suspected – that U.S. economic growth has slowed since the beginning of the year.

The report suggested that persistent problems in the housing market and harder-to-get credit are affecting the behaviour of individuals and businesses alike – making them think twice about spending and investing.

There were some disquieting data two days before the release of the February jobs report in the United States, as the monthly employment report from Automatic Data Processing Inc. indicated U.S. private-sector employment fell by 23,000 in February.

On the TSX, the energy sector rose almost two per cent as oil prices revived. The April crude contract on the New York Mercantile Exchange advanced $5 to US$104.52 a barrel – after running as high as US$104.95 – after the OPEC cartel said it has opted to maintain current production levels because crude supplies are plentiful and demand is expected to weaken in the second quarter.

OPEC president Chakib Khelil said the global market is being affected by what he calls "the mismanagement of the U.S no qualifying payday advance. economy."

Also supporting oil prices was a report that crude inventories unexpectedly dropped last week.

In Toronto, EnCana Corp. (TSX: ECA) improved $1.06 to C$76.77 and Suncor Energy (TSX: SU) climbed $2.89 to $107.70.

MGM Energy Corp. (TSX: MGX) shares fell 21 cents or 15.9 per cent to $1.11 after it said it has abandoned its Aput C-43 exploratory well in the western Mackenzie Delta after determining the hole doesn't contain commercial quantities of natural gas.

Spectra Energy Income Fund (TSX: SP.UN) units surged $1.24 or 12.4 per cent to $11.24 after it said late Tuesday it has signed a deal to be taken private by Westcoast Energy Inc., the fund's sponsor, for $274 million.

Gold prices also moved up. The TSX gold sector gained 2.8 per cent as the April bullion contract on the Nymex gained $22.20 to US$988.50 an ounce. Kinross Gold Corp. (TSX: K) climbed $1.19 to $26.05 while Barrick Gold Corp. (TSX: ABX) was ahead $1.25 to $52.15.

The financial sector turned negative following the Ambac report, losing 0.1 per cent with Bank of Montreal (TSX: BMO) down $1.87 to $45.02 while National Bank (TSX: NA) headed $1.28 higher to $48.42.

Techs also weighed with Research In Motion Ltd. (TSX: RIM) down $3.82 to $100.43.

Other major stocks pushing the TSX higher included Canadian National Railway (TSX: CNR) $1.18 to $52.92, Potash Corp. (TSX: POT) $2.56 to $158.56 and Teck Cominco Ltd. (TSX: TCK.B) $1.14 to $41.54.

Earlier, the Institute for Supply Management said its index on the U.S. service sector contracted for a second month, coming in at 49.3. But that was better than the 47.5 level that had been expected.

At the same time, the U.S. Commerce Department reported today that new orders for manufactured goods fell 2.5 per cent in January from the previous month. The reading met economist expectations.

Also, Costco Wholesale Corp.'s quarterly earnings rose 31 per cent from a year-earlier period that was weighed down by charges.

Costco rival BJ's Wholesale Club Inc. said it expects first-quarter same-store sales will by rise four to six per cent.

In other corporate news, Mega Brands Inc. (TSX: MB) shares added 51 cents to $5.51 as it disclosed it intends to sell the American-based stationery and crafts business it acquired in mid-2005 for US$350 million.

On the TSX, advances beat declines 950 to 655 with 215 unchanged as 481.2 million shares traded worth $8.2 billion.

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Filed under: finance by Specialist