TORONTO - The Toronto stock market closed higher Wednesday after the U.S. Federal Reserve said it would keep interest rates near zero far longer than previously thought.

The S&P/TSX composite index jumped 143.98 points to 12,539.21 while the TSX Venture Exchange was up 27.76 points at 1,604.05.

At the end of a two-day meeting on interest rates, the U.S. central bank said economic conditions were likely to warrant "exceptionally low levels for the federal funds rate at least through late 2014."

The extended time frame is a shift from the Fed’s previous plan to keep the rate low at least until mid-2013.

The news of extra stimulus for the American economy helped put aside earlier concerns that Britain may be slipping into recession and that negotiations on avoiding a Greek debt default had hit an impasse.

The Canadian dollar also reversed early losses as commodity prices turned higher, closing up 0.63 of a cent at 99.65 cents US.

The Fed, at the end of its scheduled two-day meeting on interest rates, said it sees the U.S. economy expanding moderately while strains in global financial markets continue to pose downside risks.

U.S. markets also turned higher as the Fed's interest rate move prompted traders to believe that the central bank could embark on a third round of economic stimulus known as quantitative easing.

"We still anticipate that a QE3 focused on buying mortgage-backed securities will be announced at either the March or April meetings," said Paul Ashworth, chief U.S. economist at Capital Economics.

The Dow Jones industrial average closed up 83.1 points to 12,758.85. The Nasdaq composite index gained 31.67 points to 2,818.31, while the S&P 500 index added 11.41 points to 1,326.06.

Traders had been cautious after key Greek bondholders met for a closed-door meeting in Paris to discuss how — and whether — to continue talks central to Europe's debt crisis.

The steering committee of the Institute of International Finance represents banks and other investment funds that hold a large part of Greece's debt and are being asked to swap their existing bonds with new ones of a reduced value, longer maturity and a lower interest rate.

Traders also took in a report that Britain's economy shrank by 0.2 per cent in the last quarter of 2011, a worse than expected result that raised recession fears. The economy had been expected to contract by only 0.1 per cent.

Another quarter of contraction would put Britain officially in a recession.

Meanwhile, Apple (NASDAQ:AAPL) shares were up $26.25 or 6.24 per cent to US$446.66 after the tech giant reported Tuesday after the market close that it sold 37 million iPhones in the last three months of 2011, vastly exceeding analyst estimates and propelling the company to record quarterly results.

Apple's net income in the fiscal first quarter, which ended Dec. 31, was US$13.06 billion, or $13.87 per share. That was up 118 per cent from $6 billion, or $6.43 per share, a year ago.

Analysts were expecting earnings of $10.04 per share for the latest quarter.

Revenue was $46.33 billion, up 73 per cent from a year ago and well above the $38.9 billion that analysts were expecting.

Shares in rival Research In Motion Ltd. (TSX:RIM) ran ahead $1.23 or 8.11 per cent to C$16.40. RIM shares have tumbled 12 per cent since announcing a management shakeup Sunday that saw co-CEOs Jim Balsillie and Mike Lazaridis step down. Traders had been unimpressed after the new CEO, Thorsten Heins, told analysts he didn't think drastic change was needed at the BlackBerry maker.

"I think though that what probably is driving the stock higher is that Apple’s results were extraordinarily good," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

"That actually says that the demand for smartphones is high and I think that is actually buoying the sector."

Mining stocks led TSX advancers as commodity prices picked up after the Fed announcement with the gold sector up more than five per cent as bullion gained $35.60 to US$1,700.10 an ounce. Barrick Gold Corp. (TSX:ABX) gained $2.65 to C$48.60 and Goldcorp Inc. (TSX:G) climbed $2.86 to $47.71.

March copper was ahead two cents at US$3.83 a pound and the base metals sector rose 2.53 per cent. Teck Resources (TSX:TCK.B) gained 82 cents to C$42.47 while First Quantum Minerals (TSX:FM) was up 79 cents to $23.95.

Oil prices also advanced as traders balanced a threat from Iranian legislators to halt oil sales to Europe against the latest oil inventory data.

The new threat from Iran follows a European Union decision to enforce an oil embargo against Iran starting this summer because of Iran's secretive nuclear program. EU countries account for about 18 per cent of Iran's oil sales.

Meanwhile, new data Wednesday showed energy inventories in the United States rising more than expected.

The U.S. Energy Information Administration said that crude inventories rose by 3.6 million barrels last week, against an expected gain of 700,000 barrels. Gasoline supplies fell by 400,000 barrels. Analysts had expected a much steeper drop in the neighbourhood of 2.2 million barrels.

The March crude contract on the New York Mercantile Exchange gained 45 cents to US$99.40 a barrel.

The energy sector was up 1.42 per cent while Suncor Energy (TSX:SU) rose 33 cents to C$34.43 and Imperial Oil (TSX:IMO) was 52 cents higher at $47.71.

The industrials sector also provided lift to the TSX with Canadian National Railway (TSX:CNR) shares up 88 cents to $76.74. CN shares had fallen almost five per cent Tuesday despite strong quarterly revenues and earnings. Canadian Pacific Railway (TSX:CP) improved by $1.09 to $71.65.

The financial sector was the major TSX weight as Greek default worries pushed the group down 0.66 per cent with Royal Bank (TSX:RY) off 56 cents at C$53.23 and TD Bank (TSX:TD) giving back 57 cents to $78.73.

In other corporate news, Crescent Point Energy Corp. (TSX:CPG) plans to buy Wild Stream Exploration Inc. (TSXV:WSX) for about $770 million and spin off some of the acquired assets and liabilities into a separate company that will be led by Wild Stream's current management. Wild Stream shares slipped 11 cents to $9.69 while Crescent Point lost 47 cents to $46.17.

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