TSX rises amid strong U.S. employment report, disappointing Canadian jobs data

TORONTO - The Toronto stock market advanced Friday as a much better than expected employment report from the United States reinforced hopes that the country's economy is steadily recovering from the worst recession since the Second World War.

The S&P/TSX composite index gained 26.99 points to 12,580.47 with gains limited by a sharp loss in gold stocks and the TSX Venture Exchange was up 6.49 points to 1,667.07.

The U.S. Labour Department reported that the economy created 243,000 jobs, far higher than the 150,000 jobs that economists had expected.

Also, the unemployment rate fell from 8.5 per cent to 8.3 per cent.

The Canadian dollar was up 0.15 of a cent to 100.19 cents following the positive news from Canada's biggest trading partner. It had traded lower earlier in the morning following the release of a disappointing domestic employment report. Statistics Canada reported that the economy created only 2,300 jobs last month, a far cry from the 25,000 that economists had expected.

The unemployment rate climbed one notch to 7.6 per cent as more people looked for work.

"Today's report reinforces the point that Canada's job creation engine is cooling markedly," observed BMO Capital Markets deputy chief economist Doug Porter.

"With domestic drivers now gearing down, the job market needs the U.S. economy to gather some serious momentum to keep the recovery on track."

U.S. markets registered strong gains as a result of the strong employment showing as the Dow Jones industrials jumped 115.65 points to 12,821.06, the Nasdaq composite index gained 28.07 points to 2,887.75 and the S&P 500 index rose 12.37 points to 1,337.91.

Oil and metal prices improved as the American jobs report raised hopes for higher demand.

The TSX energy sector rose 0.43 per cent as the March crude contract on the New York Mercantile Exchange moved up 42 cents to US$96.78 a barrel. Prices had softened since Wednesday when data showed a much larger than expected increase in U.S. crude inventories last week. Suncor Energy (TSX:SU) gained 17 cents to $34.42.

Imperial Oil Ltd. (TSX:IMO) shares were up 22 cents to $47.22 after the energy giant said it will go ahead with a $2-billion expansion of Cold Lake oilsands operation in northeastern Alberta. The expansion, to be known as the "Nabiye" project, will add 40,000 barrels per day of bitumen production when it starts up by end of 2014 — a 25 per cent boost in production.

The base metals sector rose 1.23 per cent while the April copper contract was up eight cents to US$3.86 a pound. Teck Resources (TSX:TCK.B) gained 43 cents to $42.95.

The financials sector also supported the TSX, up 0.54 per cent with TD Bank (TSX:TD) ahead 56 cents to $78.31.

The gold sector fell 1.64 per cent amid falling bullion prices with the April contract down $9.10 to US$1,747.70 an ounce.

Meanwhile, there was further evidence that the 17-nation eurozone is heading for recession.

Eurostat, the EU's statistics office, said retail sales dropped 0.4 per cent during January, in contrast to expectations for an increase of the same amount.

The December data reinforced expectations that the eurozone contracted during the fourth quarter of the year. Eurostat is due to publish its first estimate for the quarter on Feb. 15.

European markets were mixed with London's FTSE 100 index up 1.26 per cent, Frankfurt's DAX gained 1.51 per cent and the Paris CAC 40 climbed 0.77 per cent.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.5 per cent but Hong Kong’s Hang Seng ended marginally higher.

Mainland Chinese shares extended gains fuelled by news of fresh support for the farming and small-business sectors, with the benchmark Shanghai Composite Index rising 0.8 per cent while the Shenzhen Composite Index added 1.5 per cent.

In earnings news, Domtar Corp. (TSX:UFS) reported fourth quarter net income dropped to US$61 million, or $1.63 per share, compared to a profit $325 million, or $7.59 per share a year earlier. Sales were flat at $1.37 billion as the paper and pulp producer was affected by both a seasonal slowdown and the rapid decline in global pulp prices. Its shares were up $1.79 to $91.24.

Heroux-Devtek Inc. (TSX:HRX), a Quebec-based manufacturer of aerospace and industrial products, reports it earned $6.9 million, or 23 cents a share for the three months ended Dec. 31. That was 33.8 per cent higher than $5.2 million, or 22 cents earned a year earlier. Sales rose 8.8 per cent to $93.4 million and its shares climbed 25 cents to $8.10.