The Canadian Press - Sept. 29, 2010

TORONTO — The Toronto stock market closed at its highest level in more than two years Wednesday as rising prices lifted commodity stocks and investors took a more charitable view of market heavyweight Research In Motion and its new product.

The S&P/TSX composite index jumped 103.94 points to 12,382.82, its highest close since late September 2008, just before a worsening financial crisis pushed the index down to below the 10,000 level by the end of the first week of October.

The TSX Venture Exchange was ahead 10.03 points at 1,713.14.

The Canadian dollar moved down 0.36 of a cent to 96.71 cents US.

The TSX tech sector climbed 2.3 per cent with Research In Motion Ltd. (TSX:RIM) rising $1.64 or 3.39 per cent to $50.04. The increase more than made up for a slide of 2.5 per cent Tuesday as investors initially reacted poorly to the BlackBerry maker's unveiling of its new PlayBook tablet computer.

The energy sector rose two per cent with oil prices higher after a U.S. government report showed a surprise decline in inventories of crude and gasoline.

The November crude contract on the New York Mercantile Exchange climbed $1.68 to US$77.86 a barrel after the Energy Information Administration said crude oil inventories declined by 500,000 barrels last week, against an expected rise of 2.2 million barrels. Canadian Natural Resources (TSX:CNQ) climbed 95 cents to C$35.53, while Suncor Energy (TSX:SU) gained 68 cents to C$33.19.

Defensive components also helped boost the TSX with the utilities sector ahead 1.47 per cent. Fortis Inc. (TSX:FTS) was ahead 80 cents at $32.36.

The base metals segment rose 0.74 per cent as the December copper contract in New York added two cents to US$3.66 a pound. Teck Resources (TSX:TCK.B) gained 67 cents to C$41.97 while Lundin Mining Corp. (TSX:LUN) advanced 19 cents to C$5.32.

Gold stocks were slightly higher as bullion closed at yet another record, up $2 to US$1,310.30 an ounce. Gold has closed at a string of record highs in September as investors look for a hedge against fears of inflation and U.S. currency weakness. Barrick Gold Corp. (TSX:ABX) was ahead 31 cents at C$48.57.

Traders are also looking ahead to key data coming out later in the week concerning economic growth in Canada and particularly the state of the American manufacturing sector.

The July reading on Canadian gross domestic product is scheduled for Thursday and economists forecast that GDP actually slipped by 0.1 per cent that month.

Also, the U.S. Institute for Supply Management's key reading on the manufacturing sector is being released Friday. The September report is expected to show the sector is still expanding but at a slower rate than in August.

"That will be a key number for the market," said Jeff Bradacs, senior investment analyst at MFC Global Investment Management.

"The market is expecting 54.5, and (the sector) is slowing down. It's a question of how much is it slowing down."

New York markets were weak as protests in Europe against austerity measures raised worries about countries' ability to cut heavy debt loads.

Demonstrators gathered in Brussels as well as Spain and Ireland and elsewhere as labour unions protested spending cuts they say unfairly penalize average workers for problems and debt caused by banks.

The social unrest has raised concerns that countries like Spain, whose debt some say could be downgraded again soon, will not be able to implement the policies required to heal their bloated public finances.

"Governments will have more difficulty making cuts to get their budgets in order," observed Kate Warne, investment strategist at Edward Jones in St. Louis.

The Dow Jones industrials dipped 22.86 points to 10,835.28.  The Nasdaq composite index was down 3.03 points at 2,376.56 while the S&P 500 index lost 2.97 points to 1,144.73.

Mostly positive readings from economic data on U.S. manufacturing, home sales and jobs have helped push stocks higher this month after a dismal performance on August.

So far this month, the Dow Jones industrial average is on track for its best September since 1939 with a gain of 8.4 per cent. The TSX is up a much more modest 3.9 per cent for the month, but up 5.4 per cent for the year. The Dow has climbed about four per cent year to date.

"As the month comes to an end, we're waiting for the economic data next week as we start the new month and kind of get an indication which direction the economy is going," Bradacs said.

Both U.S. and Canadian employment data for September will be released Oct. 8.

In corporate news, Canadian National Railway Co. (TSX:CNR) is in mediated talks to avoid a second strike within a year, this time by 2,700 train conductors, yardsmen and traffic co-ordinators. The talks have stalled over non-monetary issues. Either side can give 72-hours notice for a strike or lockout. CN shares rose 59 cents to $65.84.  AGF Management Ltd. (TSX:AGF.B) said its net income rose to $27.8 million or 31 cents per diluted share in the third quarter ended Aug. 31. Consolidated revenue from investment management and trust services came in at $148.7 million. AGF shares gained three cents to $15.72.