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TSX rallies on positive Europe data, crude oil jumps nearly 4%

Last updated: 04:38 21 Dec 2011 AEDT, First published: 05:38 21 Dec 2011 AEDT

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Toronto's main market was higher on Tuesday afternoon as positive sentiment from Europe lifted investors, with commodity prices rising.

The S&P/TSX Composite Index was up 177.63 points, or 1.54%, to 11,717.33, while the more junior S&P/TSX Venture Composite rose 19.22 points, or 1.37%, to 1,426.61.

Europe news on Tuesday was positive, as the German Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 107.2 from 106.6 in November, the Munich-based institute said. Economists had expected a drop to 106, according to Bloomberg.

Spain's weekly auction of short-term debt was also encouraging, as borrowing costs for three- and six-month notes fell sharply amid strong demand.

For the time being, leadership succession in North Korea appears to be under control after the passing of Kim Jong-il over the weekend.

Commodities were well in the green Tuesday, with crude oil for January delivery jumping $3.33, or 3.55% to $97.21 per barrel.

Gold futures for February rose 1.32% to $1,617.80 an ounce, while silver for March advanced 2.29% to $29.54 an ounce. Base metal copper contract prices gained 1.9% to $3.37 per pound.

In Toronto, metals and mining and energy stocks were biggest gainers, followed by healthy advances in the industrials, financials and info-tech sectors.

Industrials were up nearly 1% as Bombardier (TSE:BBD.B) shares gained 3.4%.

The energy sector rose around 2.4% as Suncor Energy (TSE:SU) and Cenovus Energy (TSE:CVE) rose 1.8% and nearly 3%, respectively. Canadian Natural Resources (TSE:CNQ) was ahead by 3.45%.

Among materials, copper-focused Teck Resources (TSE:TCK.B) was higher by 3.7%, while Lundin Mining (TSE:LUN) gained almost 5%. Gold giant Barrick (TSE:ABX) was up 2.4%, and Silver Wheaton (TSE:SLW) rose 3.5%.

Eldorado Gold (TSE:ELD) and European Golfields (TSE:EGU) both advanced after they announced yesterday a $2.5 billion deal, under which Eldorado would acquire European.

On the corporate front Tuesday, San Gold (TSE:SGR) (OTCQX:SGRCF) surged over 28% after announcing the drilling results since January in the 007 Zone of the company's Rice Lake Mining Complex in Manitoba, Canada.

Highlights from the results include 23.2 grams per tonne (g/t) of gold, over 11.5 metres, and 110.1 g/t gold over 2.1 metres.

Gas pipeline operator TransCanada Corp. (TSE:TRP) has agreed to buy nine solar power projects in Ontario from Canadian Solar (NASDAQ:CSIQ) for C$470 million. The nine solar projects, which will have a combined capacity of 86 megawatts, have 20-year power purchase agreements with the Ontario Power Authority.

Peregrine Diamonds (TSE:PGD) Tuesday agreed to buy BHP Billiton's (NYSE:BHP)(ASX:BHP) 51 percent stake in the 8,580 square kilometre Chidliak diamond project on Baffin Island in Nunavut for $9 million.

Calgary-based Bankers Petroleum (TSE: BNK) (AIM: BNK) advanced 2.3% after it announced a 2012 capital program of US$215 million, which will focus on major development activities at the Patos-Marinza oilfield, including production and reserves growth drilling, reactivation and workover of existing wells, associated field infrastructure and progression of the thermal program.

On the economic front, Canada's annual inflation rate remained relatively high at 2.9% last month, as Canadians paid more for food and gas than they did 12 months earlier, said Statistics Canada.

US/Europe

US equities bounced back Tuesday as Europe concerns fell by the wayside, and encouraging US housing data was released. Banking stocks were higher, with the Dow lately up 2.7%. The Nasdaq and S&P 500 showed similar gains.

On the economic front, new construction of US houses rose 9.3% in November to a seasonally adjusted annual rate of 685,000 - the highest annual rate since April 2010 -- with multi-family activity leading growth, according to Commerce Department data.

Economists had expected an annual rate of 635,000 for starts in November. Building permits, a leading indicator of housing construction, rose 5.7% to a seasonally adjusted annual rate of 681,000, the highest annual rate since March 2010.

In corporate news, AT&T (NYSE:T) has dropped its bid to buy T-Mobile USA from Deutsche Telekom for $39 billion, with the company taking a $4 billion fourth-quarter charge to pay for a break-up fee.

Apple (NASDAQ:AAPL) was up almost 1% after the US International Trade Commission ruled that the software in some of HTC's Android smartphones violated an Apple patent and that those phones would no longer be allowed into the US.

Google (NASDAQ:GOOG) said it would acquire a portfolio of solar facilities with buyout firm KKR (NYSE:KKR). The deal brings Google's total investment in renewable energy projects to more than $915 million.

Food producer General Mills (NYSE:GIS) reported quarterly earnings of 76 cents per share, slightly missing estimates. Analysts surveyed by Thomson Reuters expected earnings of 79 cents per share.

In Europe, markets closed sharply higher today with shares in Germany leading the region. The DAX was up 3.11%, while France's CAC 40 rose 2.73% and Britain's FTSE 100 gained 1.02%. Investors are awaiting the results of a key lending program by the European Central Bank on Wednesday.

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