Toronto stock market heads higher on solid Chinese growth data, RIM upgrade

TORONTO - The Toronto stock market was higher Friday amid further indications that China continues to recover from a recent economic slump and an analyst upgrade for BlackBerry-maker Research In Motion Ltd.

The S&P/TSX composite index gained 70.28 points to 12,745.01, its best level in almost a year, while the TSX Venture Exchange dipped 0.23 of a point to 1,233.89.

The Canadian dollar was down 0.65 of a cent to 100.8 cents US even as Statistics Canada said manufacturing sales increased 1.7 per cent in November to $49.9 billion, the highest level since May 2012. It was also higher than the 1.1 per cent gain that economists expected.

Traders looked to the Bank of Canada's next interest rate announcement next Wednesday. The loonie also fell alongside other cyclical currencies such as the Australian dollar and the Norwegian kroner.

U.S. indexes were lacklustre amid solid earnings reports from General Electric and investment bank Morgan Stanley along with a disappointing read on consumer sentiment.

The Dow Jones industrials gained 8.36 points to 13,604.38 as the University of Michigan's consumer survey index slipped to 71.3 in January from 72.9 in December.

"Although the 'fiscal cliff' was scaled back, consumers appear wary as to the impact of higher taxes on their disposable incomes," said CIBC World Markets economist Andrew Grantham.

"Although the decline in sentiment during December had no discernable impact on spending, given the strong retail sales figures, lower confidence could begin to impact spending as 2013 continues."

The Nasdaq lost 8.69 points to 3,127.31 and the S&P 500 index added 0.13 of a point to 1,481.07.

Research In Motion Ltd. (TSX:RIM) shares were up seven per cent to $15.72 after Jefferies & Co. upgraded the stock to buy from hold and raised its price target to US$19.50 from $13. The move came on expectations RIM will open its corporate BlackBerry email services to iPhone and Android devices.

Even before the upgrade, RIM stock had already surged more than 25 per cent over the past week on rising optimism ahead of the unveiling of its new BB10 product on Jan. 30.

Traders were relieved at data showing that growth in China rose to 7.9 per cent in the three months ending in December, up from the previous quarter’s 7.4 per cent.

For the year, the world’s second-largest economy grew by 7.8 per cent, which was China’s weakest annual performance since the 1990s.

The slowdown was due largely to government controls imposed to cool a real estate boom and surging inflation fuelled by Beijing’s massive stimulus in response to the 2008 crisis. But it worsened as demand for Chinese exports dropped unexpectedly, raising the risk of job losses and unrest.

However, analysts say China could suffer a setback if exports weaken or the government fails to maintain investment spending that is propping up a recovery.

Telecoms advanced with Rogers Communications (TSX:RCI.B) ahead 69 cents to $46.13.

The financials sector advanced 0.72 per cent as CIBC (TSX:CM) climbed 95 cents to $83.26 while Manulife Financial (TSX:MFC) ran up 22 cents to $14.34.

Copper prices moved higher in the wake of the Chinese data. China is the world's biggest consumer of the metal which is viewed as an economic barometer as it is used in so many applications.

The March contract on the New York Mercantile Exchange closed up two cents at US$3.68 a pound and the base metals component on the TSX advanced 0.68 per cent. First Quantum Minerals (TSX:FM) gained 25 cents to C$21.29 and Turquoise Hill Resources (TSX:TRQ) was 21 cents higher to $8.65.

The gold sector rose 0.56 per cent with February bullion down $3.80 to US$1,687 an ounce. Kinross Gold (TSX:K) added seven cents to C$9.44 while Iamgold (TSX:IMG) improved by 19 cents to $10.92.

Oil prices were little changed after jumping about $2 over the past two sessions after inventory data showed a sharp decrease in stocks last week. Prices also found support this week after Islamic militants seized an Algerian natural gas facility.

The energy sector was ahead 0.44 per cent while the February crude contract on the Nymex slipped three cents to US$95.46 a barrel. Canadian Natural Resources (TSX:CNQ) climbed 54 cents to C$29.87 and Imperial Oil (TSX:IMO) ran up 28 cents to $43.70.

On the earnings front, General Electric Co. reported net income of US$4 billion on revenue of $39.3 billion for the quarter. The company’s operating profit per share was 44 cents, a penny higher than analysts expected. GE’s revenue also beat analysts’ expectations of $38.8 billion and its shares jumped 3.1 per cent to $21.96.

Shares in investment bank Morgan Stanley jumped 7.45 per cent to $22.29 as it said it earned US$867 million or 28 cents a share in the last quarter after stripping out an accounting charge. That beat expectations by a penny. Morgan Stanley revenue jumped 37 per cent to $7.5 billion, beating expectations of $7.2 billion.

After the close Thursday, chip giant Intel Corp. posted quarterly net income of $2.47 billion, or 48 cents per share, beating expectations by three cents. Revenue fell three per cent to $13.5 billion, matching analyst expectations. On a call with analysts, Intel chief financial officer Stacy Smith admitted that tablets are affecting sales of PC chips, which fell three per cent in the quarter. Intel shares lost 6.66 per cent to $21.17.