Toronto's main stock index was higher Thursday morning as financial shares rose after the European Central Bank moved in to support Italian bonds after a lukewarm sale of Italian debt had rattled markets.
The S&P/TSX Composite leaped 113.29 points, or 1%, to finish the year’s second last session at 11,841.70
The Canadian dollar garnered 0.35 cents to 97.95 cents U.S.
The market took the E.C.B.'s intervention as a sign that Europe's primary lender to banks would not allow Italy to fall into default and shake the euro-zone economy.
The Italian bond auction was the first gauge of the willingness of European banks to buy longer-term sovereign debt with the nearly 500 billion euros in three-year funds that they borrowed from the ECB last week.
Canadian financial issues responded positively, as Royal Bank of Canada was the biggest gainer, up 1.4% at $51.57.
Materials and energy shares rebounded from Wednesday's sharp selloff, supported by U.S. housing data, which provided another signal that the world's largest economy is emerging from its doldrums.
Barrick Gold, up 1.8% at $46.07, led the heavily weighted materials sector higher.
Energy shares responded to the possibility of higher oil prices after reports the Iranian government could block the Strait of Hormuz, restricting oil supply from one of the world's largest oil exporters.
Canadian Natural Resources was the sector's biggest gainer, rising 1.6% to $37.43. Rival Imperial Oil jumped 1.6% to $44.98, while Suncor hiked 2.2% to $29.19.
In individual company news, Sears Canada's stock dropped 2.7% to $10.12 after parent company Sears Holdings Corp said on Wednesday it would close as many as 120 K-mart and Sears stores in the United States.
ON BAYSTREET
The TSX Venture Exchange recovered 10.47 points to 1,461.55, while the Nasdaq Canada index edged up 4.27 points to 366.55
All but one of the 14 Toronto subgroups were positive on the day. Metals and mining vied with gold stocks for the overall lead, climbing 1.8% each, while materials gained 1.7%.
The lone naysayer was in the utilities sector, off 0.05%.
ON WALLSTREET
In New York, stocks rose Thursday in a thinly traded session as investors focused on signs of strength in the economy before calling it a year.
The Dow Jones Industrials soared 135.63 points, or 1.1%, to close at 12,287.
The S&P 500 moved up 13.50 points to 1,263.14, while the Nasdaq Composite progressed 23.76 points to 2,613.74.
Amazon eased after analysts at Goldman Sachs suggested that the online retailer's sales growth for the holiday period may fall short of expectations.
Shares of Yahoo gained 2.7% after reports that China's Alibaba Group has hired a lobbying firm to prepare a bid for Yahoo.
BP edged higher despite reports that employees could face criminal charges in relation to last year's Gulf of Mexico oil spill.
Thursday's rebound put the S&P 500 back on track for a modest gain in 2011, after the broad market index fell sharply Wednesday. The Dow is currently up 5.8% for the year, while the Nasdaq is set for a 1.8% loss.
Stocks were supported by reports on housing, manufacturing and employment that raised hopes about the U.S. economy.
Traders said low volume, typical of the holiday week, has led to more pronounced swings, and some of the moves are coming from year-end portfolio rebalancing rather than convictions over the trajectory of the market or particular stocks.
Looking ahead, many investors expect stocks to move higher in the first few months of 2012.
The U.S. economy has shown signs of improvement recently, with economists forecasting a 3.3% increase in gross domestic product in the final three months of 2011. And corporate profits are expected to rise in the fourth quarter, continuing an 11-month streak.
But the outlook for next year remains clouded by the debt crisis in Europe, which continues to weigh on demand for risk assets such as stocks.
On the economic ledger, the National Association of Realtors index of pending home sales, which measures signed sales contracts but not closed sales, rose 4% to a seasonally-adjusted annual rate of 4.42 million in November from 4.25 million in October.
Economists had expected a 0.6% increase in pending home sales.
Elsewhere, jobless claims rose 15,000 to 381,000 in the latest week, according to the U.S. Labor Department. Analysts surveyed by Briefing.com had expected 368,000 claims.
But the figure remained below 400,000, giving investors hope that the labor market will strengthen in the New Year.
Finally, an index of manufacturing activity in the Chicago area eased slightly in December but held near a seven-month high, according to the Institute for Supply Management.
The price on the benchmark 10-year U.S. Treasury gained a bit of ground, pushing the yield down to 1.90% from 1.91% Wednesday. Treasury prices and yields move in opposite directions.
Oil for January delivery regained 31 cents to $99.67 U.S. a barrel.
Gold futures for February delivery fell $23.20 to $1,540.90 U.S. an ounce.
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