Stocks rise on higher commodities, retail sales, manufacturing data

TORONTO - The Toronto stock market racked up a solid advance Tuesday to its highest point of the year as commodity prices rose and investors took in mixed consumer data from the United States.

TORONTO - The Toronto stock market racked up a solid advance Tuesday to its highest point of the year as commodity prices rose and investors took in mixed consumer data from the United States.

The S&P/TSX composite index ran up 163.79 points to 11,495.83 on hopes that an economic recovery is taking hold and third-quarter earnings won't disappoint.

The TSX energy sector rose 1.45 per cent as the October crude contract on the New York Mercantile Exchange rose $2.07 to US$70.93 a barrel. Canadian Natural Resources (TSX:CNQ) rose $1.89 to C$73.04 and Suncor Inc. (TSX:SU) was ahead $1.30 to $38.65.

The Canadian dollar moved up 1.05 cents to 93.34 cents U.S. even as the Bank of Canada again warned that headwinds from a strong currency are posing a risk to a smooth economic recovery.

The TSX Venture Exchange climbed 15.52 points to 1,269.35.

New York markets gained headway with the Dow Jones industrials up 56.61 points to 9,683.41 after the U.S. Commerce Department reported that retail sales rose a seasonally adjusted 2.7 per cent last month, after falling 0.2 per cent in July.

The showing was much better than the two per cent increase that economists had expected.

Higher auto sales made a strong contribution because of the government's popular Cash for Clunkers program. Excluding autos, U.S. retail sales still rose 1.1 per cent, above an expected 0.4 per cent jump.

"Today's data... are surprising given the drop in jobs during the month," observed BMO Capital Markets senior economist Michael Gregory.

"Next month's data will be the acid test, with the cash-for-clunkers program over. Improving consumer confidence might not be enough to sustain spending without growth in jobs and incomes."

The Nasdaq composite index rose 10.86 points to 2,102.64 while the S&P 500 index climbed 3.29 points to 1,052.63 as investors also noted that Best Buy Co., the largest U.S. electronics retailer, said Tuesday that second-quarter results fell below expectations as sales at established stores fell. Still, the retailer raised its guidance for the year based on stabilizing customer traffic.

Best Buy shares fell $2.09 to US$38.32.

Also, U.S. grocer Kroger Co. reported earnings that fell short of analyst expectations and cut its earnings outlook as well. Its shares lost $1.65 US$20.46.

Beyond that, the Federal Reserve said manufacturing in the New York region improved for a second straight month in September. Fed chairman Ben Bernanke also said that the worst recession since the 1930s is "very likely" over.

In the background of trading this week are memories of the collapse of U.S. investment bank Lehman Brothers a year ago, which triggered the worst global financial crisis in 70 years.

Stock markets didn't bottom until early March and, since then, the main Toronto index has roared ahead 52 per cent and some analysts say markets are ripe for some sort of retracement.

There is also concern that investors have gotten ahead of themselves a year after the Lehman debacle.

"We're not out of the woods yet because the financial system, while it has started to heal, it's not fully recovered either," said Paul Vaillancourt, director of asset allocation at Franklin Templeton Managed Solutions in Calgary.

Vaillancourt added that investor sentiment will be tested when companies report third-quarter earnings in a few weeks.

Elsewhere in the commodity sector, the December bullion contract on the Nymex was ahead $5.20 to US$1,006.30 an ounce while December copper gained 4.05 cents at US$2.845 a pound.

The base metals sector in Toronto rose 2.74 per cent as Ivanhoe Mines (TSX:IVN) gained 53 cents to C$13.58 while Teck Resources (TSX:TCK.B) advanced 50 cents to $29.25 .

The gold group climbed 1.63 per cent. Goldcorp Inc. (TSX:G) gained $1.19 to $45.44 while Shore Gold (TSX:SGF) surged 18 cents or 18.37 per cent to $1.16.

Financials were mainly higher as Scotiabank (TSX:BNS) moved up $1.80 to $48.50 while Manulife Financial fell 52 cents to $21.34.

Shares in telecom BCE Inc. (TSX:BCE) were off 21 cents to $26.57 after UBS cut the telecom's rating to neutral from buy on valuation concerns.

Garda World Security Corp. (TSX:GW) had a $4-million profit in its latest quarter, as the armoured truck operator's revenue increased and the company continued to keep a close watch on its expenses. The figure compared with a net loss $1.2 million a year earlier and its shares were up 44 cents to $5.98.

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