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Canadian dollar advances amid strong wholesale sales data, glum overseas reports

TORONTO – The Canadian dollar closed higher Thursday amid data showing a solid advance in wholesale sales in September.

The loonie rose 0.35 of a cent to 88.45 cents US as Statistics Canada reported that wholesale sales rose 1.8 per cent from August to $54 billion and considerably more than the 0.8 per cent gain analysts expected.

Other data out Thursday showed business activity declining in China and Europe while another report indicated the U.S. continues to be the major global economic prop.

Worries about Europe grew after financial information company Markit said its purchasing managers’ index for the eurozone, a broad gauge of business activity, fell to a 16-month low of 51.4 points in November from 52.1 in October. Though anything above 50 indicates expansion, the survey suggests a recession isn’t far away.

Manufacturing activity in China fell to a six-month low in November, reflecting sluggishness in the world’s No. 2 economy and weakness abroad, according to a survey of factory conditions released Thursday. The HSBC’s preliminary purchasing managers’ index for China fell to 50 this month from 50.4 in October. It’s the latest sign that China’s economy continues to struggle after growth in the third quarter slowed to a five-year low of 7.3 per cent.

Meanwhile, the Philadelphia Fed index, a snapshot of manufacturing activity in the U.S. Northeast, jumped to 40.8 in November — far higher than the 18.5 reading that had been expected — from 20.7 in October. This is the highest reading of activity since December 1993. Both new orders and shipments rose sharply in November. Labor market indicators also improved.

Traders also looked ahead to the release of the latest reading on inflation.

Statistics Canada is expected to report Friday that its October Consumer Price Index declined by 0.2 per cent in October following a slight 0.1 per cent rise in September.

In the U.S. on Thursday, data showed that inflation in October was flat against the 0.1 per cent drop that economists had been expecting.

On the commodities front, the December crude contract in New York was $1 higher at US$75.58 a barrel.

December copper fell three cents to US$3.02 a pound and December gold faded $3 to US$1,190.90 an ounce.