TORONTO - The Toronto stock market closed higher with financials taking the lead following a solid earnings report from American bank Citigroup.

The S&P/TSX composite index was 58.94 points higher at 12,668.01, held back by base metal companies despite rising copper prices. The TSX Venture Exchange gained 15.68 points to 1,838.21.

A day before the Bank of Canada delivers its next announcement on interest rates, a stronger U.S. currency helped push the Canadian dollar down 0.22 of a cent to 98.61 cents US. Economists widely expect the central bank to pause on raising rates following three increases this year that have brought the key rate up to one per cent.

The loonie weakened as a stronger greenback recouped some recent losses. There have been ongoing uncertainties about how much new money the Federal Reserve is preparing to pump into the U.S. economy as part of another round of quantitative easing, which is expected to be announced early next month.

The TSX financial sector was up 1.08 per cent as Citigroup Inc. reported its quarterly profit rose to US$2.17 billion as provisions for bad loans declined. Net income amounted to seven cents a share, which beat analysts' estimates by two cents and Citigroup shares were up 22 cents at US$4.17 in New York.

"Certainly some good news out of the financials tends to be good news on both sides of the border," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

Investors also took in some major buying activity in the financial sector. Royal Bank of Canada (TSX:RY) is acquiring London-based BlueBay Asset Management for more than C$1.5 billion. BlueBay shareholders will be entitled to 485 pence in cash for each BlueBay share, a premium of 29 per cent over the last closing price of BlueBay shares last Friday.

The transaction will be funded using RBC’s existing cash resources and is not expected to have a material impact on its earnings per share in the near term. Royal Bank stock was up 65 cents at C$56.20.

Elsewhere in the sector, CIBC (TSX:CM) climbed $1.09 to $78.36 while Manulife Financial rose 29 cents to $12.71.

Telecoms were also higher with Rogers Communications (TSX:RCI.B) ahead 97 cents at $40.82.

Energy stocks advanced as oil prices recovered some ground after two days of losses, with the November crude contract on the New York Mercantile Exchange $1.83 higher at US$83.08 a barrel. Nexen Inc. (TSX:NXY) rose 18 cents to C$22.58 while Talisman Energy (TSX:TLM) climbed 17 cents to C$18.16.

The base metals sector was the leading decliner, down 1.15 per cent following a string of strong gains even as the December copper contract on the Nymex rose two cents to US$3.86 a pound.

"I think we’ve seen some really strong moves recently so I would say in advance of earnings this week and with big moves in volatile sectors, it’s not too surprising that you see pullbacks as people decide they need to rebalance," Warne said.

Teck Resources (TSX:RCI.B) stepped back $1.09 to C$44.92.

Gold stocks also declined as the December bullion contract in New York closed little changed, up a dime at US$1,372.10 an ounce. Goldcorp Inc. (TSX:G) faded 38 cents to C$44.61 while Yamana Gold Inc. (TSX:YRI) shed 11 cents to C$11.31.

Meanwhile, First Quantum Minerals Ltd. (TSX:FM) saw its shares decline 41 cents to $82.66 after announcing it aims to acquire Antares Minerals (TSXV:ANM) in a friendly deal valued at about $460 million. Antares’ principal asset is the Haquira project in southern Peru adjacent to Xstrata Copper’s Las Bambas copper-gold project. Antares shares jumped $2.09, or 46.55 per cent, to $6.58.

Investors will be turning their attention to corporate earnings this week as dozens of large companies report their results. Broad economic reports have been the main factor driving stock trading in recent months.

After the market close in New York, IBM reported quarterly earnings and revenue that beat expectations.

Earnings came in at US$3.6 billion or US$2.82 a share, better than the US$2.76 a share analysts expected. Revenue also beat the street, coming in at US$24.3 billion, better than the expected US$24.2 billion.

And soaring sales of iPhone 4 and iPad sent Apple Inc.’s earnings and revenue past expectations. The company reported profit of US$4.31 billion or $4.64 a share, better than the $4.08 that analysts expected. Revenue jumped 67 per cent to US$20.34 billion, which also blew past expectations.

The strong Citigroup report also pushed New York indexes higher with the Dow Jones industrial average up 80.91 points at 11,143.69.

The Nasdaq composite index moved 11.89 points higher to 2,480.66, while the S&P 500 index climbed 8.52 points to 1,184.71.

There was some good news from the housing sector as the U.S. National Association of Home Builders said Monday its monthly index of builders’ sentiment rose in October to 16, the first increase in five months. The index had been at 13 for the past two months, the lowest level since March 2009.

Meanwhile, the Federal Reserve reported that output at U.S. factories, mines and utilities dropped 0.2 per cent last month, against the 0.2 per cent rise that economists had expected. Output by manufacturers, the largest element of industrial production, also fell 0.2 per cent.

In other corporate news, three Canadian pension funds refused to confirm or deny reports that a last-minute bid to keep PotashCorp independent is in the works. The Globe and Mail reported Monday that Alberta Investment Management Corp. is leading talks with other funds to thwart BHP Billiton’s hostile US$38.6-billion bid for the Saskatchewan-based fertilizer powerhouse (TSX:POT). Potash shares were down $1.44 at $145.34.

Ivanhoe Mines (TSX:IVN) shares declined 53 cents to $24.24 as it announced plans for a conditional rights share offering in a move to raise US$800 million to US$1 billion to develop the Oyu Tolgoi copper-gold mine in Mongolia. Full terms of the offering were not disclosed, but the company said in a news release that each new common share of Ivanhoe Mines available for purchase by rights holders would be at a discount to the company’s current market price.

Shares in Crew Gold Corp. (TSX:CRU) ran ahead 54 cents or 13.17 per cent to $4.64 as it announced that Russian steelmaker Severstal is buying all the outstanding shares it does not already own. Severstal will pay $4.65 a share.