North American stock markets were higher on Friday afternoon on the heels of a report from European regulators that only a small number of banks would struggle if the economy weakened.
The S&P TSX Composite Index burst into the green 46.45 points to end the day and week at 11,714.21. Over five trading days, the increase was 144.56 points or 1.3%.
The tests were designed to predict whether banks could survive a downturn in the economy and showed just seven of 91 European banks tested would fail. The European Union said the results should put to rest questions about the health of the continent’s financial sector.
TSX financial stocks were up after the report with CIBC rising 87 cents to $68.14.
Magna International shareholders approved a controversial plan to pay Frank Stronach about $1 billion in cash, shares and other incentives to give up his family’s voting control of the company. The company’s class A shares were up 30 cents to $77.04.
The Toronto energy sector gained strength, as shares in Suncor Energy Inc. dropped eight cents to $33.33.
Gold shares moved slightly lower, as stock in Barrick Gold Corp. dropped 15 cents to $43.81
In Canadian earnings, Celestica Inc. slipped to a small $6.1 million net loss in the second quarter, reversing a year-earlier profit. Revenue was $1.59 billion and its shares slipped 28 cents to $9.13.
Harry Winston Diamond Corp. has agreed to pay $220 million U.S. in shares, cash and debt for 9% of the Diavik mining venture. The transaction with Kinross Gold Corp. will boost Harry Winston’s holding in the mine to 40%. Its shares were down $1.51 to $13.04.
In economic news, Statistics Canada said consumer prices in the nation rose 1% in the 12 months to June, following a 1.4% increase in May, leaving some room for the Bank of Canada to hold steady on interest rates through the summer.
The reading on underlying core inflation also edged down to 1.7% in June from 1.8% in May.
The Canadian dollar was 0.24 cents higher to 96.47 cents U.S.
ON BAYSTREET
On the day, 10 of the 14 TSX subgroups were higher. Metals and mining vied with their cousins among global base metals for top gainer at 1.3% each, while industrials surged 1.1%.
The losing groups were weighed mostly by consumer staples, off 0.9%, information technology, which lost 0.8%, and gold, off 0.1%.
The TSX Venture Exchange tacked on 6.56 points to 1,394.98 while the Nasdaq Canada index was up 10.59 points at 643.90
ON WALLSTREET
In New York, stocks rallied Friday afternoon, with the Dow briefly turning positive for the year after a report showed that most of Europe's big banks passed their stress tests, easing investor worries about the strength of the global economy.
The Dow Jones industrial average grew 102.32 points, or 1%, on the day to 10,424.62. On the week, the surge was 326.27 points, or 3.2%.
The S&P 500 index moved 8.99 points higher to 1,102.66. The Nasdaq composite index remained negative by 1.20 points to 2,244.69.
Stocks struggled in the morning as investors weighed a mix of earnings ahead of the release of the stress test results. Investors were also reluctant to move much after Thursday's big rally, sparked by a series of strong profit reports.
But the release of the test results -- which showed that the major European banks are sufficiently capitalized should a double-dip recession take place -- seemed to soothe investors, paving the way for an afternoon rally.
The test of 91 banks showed all but seven would be able to hold on during a downturn and emerge in good shape, even if they suffered billions in asset writedowns and trading losses. However, critics contend that the tests didn't go far enough to account for how banks holding sovereign bonds might react if a particular country defaulted on its debt, say Greece or Spain.
Ford Motor reported better-than-expected quarterly sales and earnings that reversed its operating loss from a year ago, building on its return to profitability following several years of weakness. Shares gained 5%.
Dow component Verizon Communications posted a quarterly loss due to costs associated with a buyout of 11,000 workers. Excluding those costs, the telecom posted earnings that topped estimates and revenue that missed forecasts. Shares gained 4%.
Dow component McDonald's reported better-than-expected quarterly earnings that rose from a year ago, but reported weaker-than-expected sales at stores open a year or more -- a retail metric known as same-store sales. Shares fell 2%.
After the close Thursday, fellow Dow component Microsoft reported higher quarterly sales and earnings that topped estimates, thanks to strong sales of its Windows 7 and an improved personal computer market. Shares fell 0.8% as investors took a "sell the news" approach.
Also after the close Thursday, Dow component American Express reported higher quarterly sales and earnings that topped expectations. However, the company's CEO issued a tepid outlook on the economy and AmEx's next few quarters, leaving shares little changed Friday. Shares gained 3.6%.
On Thursday, Amazon.com reported quarterly sales and earnings that rose from a year ago, but missed some analysts' projections. Shares fell as much as 11% in pre-market trading and 9% in the morning, but cut losses to 2% in the afternoon.
Shares of Genzyme spiked 18% on a report that French biotech Sanofi-Aventis has informally approached the company about a potential buyout, the Wall Street Journal reported Friday. Sanofi-Aventis' American Depositary Receipts (ADRs) slipped 5%.
Pay czar Kenneth Feinberg's latest review of pay practices at banks that received bailout funds showed 17 companies made $1.6 billion U.S. in "ill-advised payments" during the financial market crisis. Companies listed included Citigroup and Goldman Sachs.
Treasury prices settled, as yields on the 10-year note increased to 2.99% from Thursday’s 2.94%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil slid 30 cents to $79 U.S.
Gold prices gave back eight dollars to $1,188 U.S. an ounce.
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