TORONTO (Reuters) - Canadian stocks closed at their highest level in nearly four months on Friday, boosted by financial and energy issues as surprisingly healthy U.S. employment figures offset sluggish Canadian jobs data and uncertainty over a Greek debt deal.
U.S. job creation in January far outstripped analyst expectations, with the unemployment rate dropping to a near three-year low of 8.3 percent.
In addition, the pace of growth in the U.S. services sector unexpectedly accelerated to its highest level in nearly a year.
“We’ve had a stream of generally positive numbers and the rally is already looking pretty strong,” said Gavin Graham, president at Graham Investment Strategy. “The market is wanting to believe these numbers are sustainable.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 23.80 points, or 0.2 percent at 12,577.28. It was the TSX’s highest close since October 8 and capped the index’s seventh straight weekly rise.
Seven of the TSX’s 10 main sectors finished higher, led by financials, which climbed nearly 1 percent. Toronto-Dominion Bank (TD.TO) was the sector’s biggest gainer, rising 1.4 percent to C$78.83.
Energy shares also benefited as oil prices climbed on hopes the rise in U.S. jobs would boost demand from the world’s top consumer. <O/R> Cenovus Energy (CVE.TO) climbed 2.9 percent to C$38.80.
Toronto stocks are up more than 5 percent this year after ending 2011 down 11 percent. With central banks in the U.S. and Europe flooding markets with cheap liquidity, analysts are more bullish about the rally enduring.
“Effectively, Canada is a leveraged play on what happens in the U.S., given how much of our exports go there, and if you believe the U.S. is going to be strong then Canada could easily do a 10 percent increase,” said Graham.
Gold mining shares, down 2.5 percent, were the main drag as bullion prices slipped on the U.S. jobs number, retreating from an 11-week high as a brightening U.S. economic outlook hurt the metal’s safe-haven status.
Barrick Gold (ABX.TO) led decliners, sliding 2.3 percent to C$48.59.
Investors also remained nervous about the absence of a restructuring deal between Greece and its creditors, with 14.5 billion euros in Greek bond redemptions due next month.
In Canada, the employment data was not so cheery as just 2,300 net new jobs were added in January as layoffs in construction and professional services offset modest hiring in manufacturing, Statistics Canada said.
The jobless rate ticked higher to 7.6 percent from 7.5 percent in December, its highest level since April 2011, as more people were looking for work. Analysts in a Reuters poll had predicted 23,100 new positions and a jobless rate holding steady at 7.5 percent.
“Canada had succeeded early on in the recovery returning all the jobs that had been lost during the recession and now it’s having a harder time pushing further,” said David Tulk, chief Canada macro strategist at TD Securities.
“It’s sort of the mirror image in the U.S., where the U.S. has struggled for quite some time and is finally getting its act together.”
Editing by Rob Wilson