TSX up, Chinese manufacturing expands, RIM jumps on analyst share price upgrade

TORONTO – The Toronto stock market closed higher Thursday after data showed that China’s manufacturing sector is back in expansion mode after 13 months of contraction.

The S&P/TSX composite index gained 53.04 points to 12,153.1 while the TSX Venture Exchange was up 5.7 points to 1,248.36.

The TSX also benefited from a sharp run-up from Research In Motion Ltd. (TSX:RIM). Its shares jumped $1.77 or 17.3 per cent to $12, its highest level since early May, on a heavy volume of 12.6 million shares. The surge came after National Bank (TSX:NA) analyst Kris Thompson hiked his target on RIM shares to US$15 from $12. RIM unveils its new line of smartphones Jan. 30.

Earlier this week, analyst Peter Misek at Jefferies & Co. doubled his share target to US$10, saying he has been seeing better than expected support from carriers.

Meanwhile, the Canadian dollar was lower in the wake of a disappointing read on September retail sales. The loonie was down 0.07 of a cent at 100.28 cents US as Statistics Canada reported that sales edged up just 0.1 per cent to $39.1 billion in September.

Economists had expected retail sales to rise by 0.5 per cent during the month.

New York markets were closed for the American Thanksgiving holiday. U.S. markets reopen Friday for a shortened session.

HSBC Corp.’s purchasing managers’ index showed that China’s manufacturing sector came in at 50.4 in November, up from 49.5 in October. Any reading over 50 indicates expansion. The PMI index measures overall manufacturing activity by surveying numerous indicators including orders, employment and actual production.

The HSBC reading was particularly good news for the global economy, which is still recovering slowly from the 2008 financial crisis and recession.

“Looks like the Chinese economy is perking up a bit and that’s good for commodities and the whole risk trade,” said John Johnston, chief strategist at Davis Rea Ltd.

It’s also a big positive for a primarily resource-based market such as the TSX. China, the world’s second-largest economy, has had a huge appetite for commodities, in turn raising prices for oil and metals and stock prices for energy and mining companies.

The base metals sector gained 1.24 cent with copper unchanged at US$3.51 in electronic trading on the New York Mercantile Exchange. Prices had risen earlier in the wake of the Chinese report. Copper is viewed as an economic bellwether as it is used in so many applications and China is the world’s biggest consumer of the metal. First Quantum Minerals (TSX:FM) was ahead 35 cents to C$21.92 while Teck Resources (TSX:TCK.B) was up 82 cents to $32.59.

Industrials were also higher with Canadian National Railway (TSX:CNR) ahead $1.36 to $87.12.

Financials also provided lift as CIBC (TSX:CM) rose 35 cents to $79.05.

The energy sector was ahead 0.55 per cent while oil prices dipped after running up strongly in the past few days on concerns that fighting between Israel and Hamas could spread, jeopardizing shipments of oil from the Mideast.

The January crude contract was off 26 cents to US$87.12 a barrel. Cenovus Energy (TSX:CVE) advanced 50 cents to C$33.62.

The gold sector was off about 0.15 per cent as December bullion gained $1.30 to US$1,729.50 an ounce. Kinross Gold Corp. (TSX:K) faded eight cents to C$9.81.

Traders were also focused on whether the White House can come to a deal with Congress on a budget to avoid automatic tax increases and spending cuts at the start of next year, a shock to the economy that would likely tip the U.S. back into recession.

There have also been concerns about whether Greece will get its next batch of bailout cash. Greece is expected to finally get the approval for the release of the money it needs to avoid bankruptcy at a meeting in Brussels on Monday.

In corporate news, SABMiller, the world’s second-largest brewer, has reported a 13 per cent increase in first-half profit driven by its acquisition of Australian brewer Foster’s. The brewer of brands including Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch reported Thursday that net profit rose to $1.6 billion from $1.4 billion a year earlier. Group revenue was up 11 per cent to $17.5 billion.