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TORONTO (Reuters) - Canada's main stock index advanced to its highest in about 2-1/2 years on Friday as disappointing North American jobs data proved to be a boon to commodity prices, helping drive up shares of natural resource companies.
Prices of gold, oil and other commodities gained on speculation that soft U.S. employment figures for December would push the U.S. Federal Reserve to slow the wind-down of its monetary stimulus program. <GOL/> <O/R>
It was the benchmark index's biggest single-day percentage jump in more than three weeks and its fourth straight daily gain.
After trailing its U.S. peers in 2013, the Canadian index appeared to be gathering momentum this week. It outperformed the S&P 500 .SPX on Friday.
"We'll probably keep pace with the United States in 2014," said Philip Petursson, managing director, portfolio advisory group, at Manulife Asset Management. "Whether we'll outpace the U.S. is the real question."
"Earnings will drive the market this year," he added. "The prospects (for Canadian companies) are looking vastly improved over 2013."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 118.11 points, or 0.87 percent, at 13,747.52, after rising as high as 13,750.66, its strongest level since mid-2011.
The index ended the week 1.5 percent higher.
Government data showed the Canadian economy lost 45,900 jobs last month, resulting in a higher unemployment rate and raising expectations that the Bank of Canada might trim interest rates.
The United States recorded the weakest jobs growth in about three years in December, with some indication that severe cold weather had had an impact.
"It's a double whammy," said Shailesh Kshatriya, associate director for client investment strategies at Russell Investments Canada.
"It was a horrible number. There's no way to sugarcoat it," he said of the Canadian jobs report. The data, coupled with sluggish trade numbers and high household indebtedness, points to a slight weakening of the Canadian economy, he added.
Nine of the 10 main sectors on the index were higher on Friday.
Shares of energy producers were up 1.3 percent, reflecting a 1.2 percent rise in the price of U.S. crude oil. Canadian Natural Resources Ltd (CNQ.TO) rose 3.1 percent to C$36.19, and had the biggest positive influence on the index. Suncor Energy Inc (SU.TO) gained 1.8 percent to C$37.96.
In company news, Saputo Inc (SAP.TO) extended its offer for Australia's Warrnambool Cheese and Butter Factory Holdings Co WCB.AX. Saputo's stock firmed 1.7 percent to C$49.85.
Shares of IT services provider CGI Group Inc (GIBa.TO) dropped 2.5 percent to C$34.37 after news emerged that its contract with the U.S. government for the Obamacare website HealthCare.Gov would end next month.
Editing by Peter Galloway