Toronto stock market to advance, commodities rise on strong Chinese trade data

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TORONTO - Resource stocks were expected to power the Toronto stock market higher Thursday as prices for oil and copper ran ahead in the wake of strong Chinese trade data.

The Canadian dollar rose 0.16 of a cent to 101.41 cents US.

U.S. futures also advanced as data showed that China's export growth more than quadrupled in December from the previous month to 14.1 per cent while imports rose six per cent after no growth in November.

China's trade surplus unexpectedly surged to $31.6 billion in the month, leaving the 2012 total at $232 billion, the widest since 2008.

The Dow Jones industrial futures gained 33 points to 13,358, the Nasdaq futures were up eight points to 2,730 while the S&P 500 rose 4.25 points to 1,460.

The trade figures are good news since they indicate that China is gradually emerging from its worst economic downturn since the 2008 global crisis. Factory output and other activity also improved in the final quarter of 2012, but analysts say a recovery is still shaky for the world's second-largest economy.

The World Bank and private sector forecasters expect growth of about eight per cent in 2012 and about 7.5 per cent this year. That would be stronger than the West and Japan but China’s weakest performance since the 1990s.

Hopes for higher demand pushed commodity prices higher. Strong demand for commodities from China in the past has pushed prices for oil and metals higher and also supported energy and mining stocks on the resource-intensive TSX.

The February crude contract on the New York Mercantile Exchange gained $1.09 to US$94.19 a barrel.

The March copper contract advanced four cents to US$3.71 a pound. China is the world's biggest consumer of the metal.

Gold prices also climbed with the February contract up $8.30 to US$1,663.80 an ounce.

Traders also focused on earnings this week now that the U.S. fiscal crisis has briefly faded to the background.

Alcoa Inc. kicked off the fourth-quarter corporate earnings season Tuesday with a positive earnings report and outlook.

Astral Media Inc. (TSX:ACM.A) says its first-quarter profit was $59.6 million or $1.05 per share, beating analyst estimates. Revenue rose to $274.5 million, which was about $3 million below analyst estimates but higher than a year before. The company has a friendly deal with BCE Inc. (TSX:BCE), which is seeking regulatory approval to buy Astral for about $3.38 billion.

Canadian pharmaceutical chain Jean Coutu Group (TSX:PJC.A) on Thursday reported stronger sales and a quarterly profit that beat analyst estimates by a penny per share.

Net profit was $56.2 million or 26 cents per share while revenue was $716.6 million, up $16.5 million from a year earlier, which was in line with analyst estimates compiled by Thomson Reuters.

Technology company Sandvine Corp. (TSX:SVC) said revenue hit US$27.5 million in the fourth quarter, up 26 per cent from a year earlier and $4 million above analyst estimates. The company, which reports in U.S. currency, had $6.5 million or 4.6 cents per share of net income. Sandvine’s technology is designed to help operate communications networks efficiently.

European bourses were mainly higher as the Bank of England left its base interest rate and its monetary stimulus program unchanged, as widely anticipated by analysts. The central bank’s Monetary Policy Committee left the key rate at 0.5 per cent, where it has been since March 2009.

The Bank of England’s stimulus program, called quantitative easing, was also not increased from its current 375 billion pounds (US$604 billion).

Later in the day, the European Central Bank is expected to keep interest rates unchanged at 0.75 per cent for the 17-country eurozone despite the weak economy.

London's FTSE 100 index ahead 0.11 per cent, Frankfurt's DAX was ahead 0.26 per cent while the Paris CAC 40 dipped 0.11 per cent.

Earlier in Asia, Japan’s Nikkei 225 index rose 0.7 per cent, South Korea’s Kospi added 0.8 per cent, Australia’s S&P/ASX 200 advanced 0.3 per cent and benchmarks in Singapore, Taiwan and New Zealand also rose.

Hong Kong’s Hang Seng gained 0.6 per cent following a decision by the China Securities Regulatory Commission to allow some initial public offerings of mainland companies to be carried out in Hong Kong.

In other corporate news, MacDonald, Dettwiler and Associates Ltd. (TSX:MDA) has secured a $706-million deal with the Canadian Space Agency for the construction of three satellites. The contract will lead to the completion of construction, the launch of the satellites planned for 2018 and the first year of operation of the satellite system.

Bonavista Energy Corp. (TSX:BNP) is sharply cutting its monthly dividend, saying commodity prices are too low to sustain the current payout. Bonavista plans to cut the monthly dividend to seven cents a share from 12 cents.

Organizations: TSX, Dow Jones, World Bank BCE Inc. New York Mercantile Exchange Bank of England Alcoa Inc. Astral Media Inc. Jean Coutu Group MacDonald, Dettwiler and Associates Monetary Policy Committee European Central Bank FTSE 100 China Securities Regulatory Commission Canadian Space Agency Bonavista Energy

Geographic location: China, Toronto, U.S. Japan London Frankfurt Asia Singapore Taiwan New Zealand Hong Kong

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