TORONTO (Reuters) - Canada's main stock index rose on Thursday, led by gold mining stocks after weak U.S. manufacturing data tempered expectations for Federal Reserve interest hikes.
Gold rebounded from a two-month low as the U.S. dollar fell on manufacturing data that raised doubts about the economy's strength.
"Sloppy data" reduces expectations for a Fed rate hike in September, said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management.
U.S. jobs data is due on Friday, which may offer clues on the outlook for U.S. interest rates.
Gold miners gained after losing significant ground in August, with Barrick Gold adding 4.6 percent to C$23.31.
The global gold mining sub-sector had lost some 20 percent of its value in August, while spot gold was down around 3 percent over the same period.
The Toronto Stock Exchange's S&P/TSX composite index closed up 85.96 points, or 0.59 percent, at 14,683.91.
Eight of the index's 10 main groups ended higher.
Indicators for the stock market are positive, including data that is not too hot and not too cold, investor ownership of equities that is low and cash levels that are high, Avigdor said.
The TSX has rebounded 27 percent from a 3-year low in January and is trading just below a 13-month peak reached in the middle of August.
Dollarama Inc was among the most influential movers on the index after it reported a higher-than-expected profit. Shares of the dollar store operator rose 4.4 percent to C$101.10.
Investors cheered the expansion of Tim Hortons into Britain. The coffee and doughnut chain's owner Restaurant Brands International Inc was up 1.9 percent at C$63.52.
Shares in Canadian Western Bank gained 0.3 percent to C$26.40 despite a drop in third-quarter earnings, while the overall financials group firmed 0.1 percent.
Energy dipped 0.1 percent as oil fell. U.S. crude oil futures settled $1.54 lower at $43.16 a barrel, pressured by supply glut worries. [O/R]
The materials group, which includes precious and base metals miners and fertilizer companies, added 2.3 percent.
Potash Corp fell 1.8 percent to C$23.33 after two days of gains tied to the announcement of merger talks between it and Agrium Inc. Farmers plan to pressure regulators to protect their interests in any deal.
Shares in First Majestic Silver Corp declined 2.5 percent to C$15.41 after a hedge fund disclosed a short position in the stock.
Additional reporting by Alastair Sharp; Editing by Phil Berlowitz and James Dalgleish