Source: The Canadian Press

The Toronto stock market closed higher Tuesday as investors brushed off the latest move by China’s central bank to raise interest rates in a bid to dampen high inflation.

The S&P/TSX composite index was 80.59 points higher to 13,892.52 as investors preferred to concentrate on recent positive economic data and corporate earnings.

The TSX Venture Exchange gained 5.85 points to 2,380.88.

The Canadian dollar closed down 0.45 of a cent to 100.54 cents US as oil prices moved lower and China upped its key rate by a quarter point to 6.06% — the second move to tighten rates in just over a month.

Chinese inflation jumped to a 28-month high of 5.1% last November before moderating in December.

China has made other moves to tackle inflation over the last year, such as ordering banks to raise the amount of money they must keep on reserve.

Past moves by China to slow its economy have usually affected commodity prices in the short term and Tuesday’s move was no exception as oil and copper moved well off session lows.

“The impact of it has always been short-lived,” said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd.

“You can’t ignore the fact that China has held up extremely well during the downturn, still continuing to grow around the 10% mark if not just a little below.”

However, Watson added that the market reaction could be very different is China feels it has to increase rates at a more dramatic pace to choke off inflation.

“Eight months from now and (rates) are up another 200 basis points — that’s going to be a different story,” he said.

“That would be where the market says, OK, that could have an impact that brings the growth rate in China below where we expect it to be, in which case you might see a greater reaction in the marketplace.”

The March crude contract on the New York Mercantile Exchange was down 54 cents to US$86.94 a barrel after going as low as US$85.88 a barrel.

Crude has fallen sharply over the previous three sessions as fears ease that protests in Egypt could disrupt Middle East crude supplies.

Oil jumped above US$92 to a 26-month high last week as violent clashes between supporters and opponents of Egyptian President Hosni Mubarak raised concern that shipping through the Suez Canal — a major transit point for crude oil and cargo — could be affected.

The energy sector was off 0.25% as Imperial Oil (TSX:IMO) fell 34 cents to $44.24 and EnCana Corp. (TSX:ECA) dropped 38 cents to $31.25.

Gold stocks led advancers as investors looking for protection from inflation and declining currencies such as the greenback sent the April bullion contract in New York up $15.90 to a three week high of US$1,364.10 an ounce. Barrick Gold Corp. (TSX:ABX) gained $1.17 to $48.45 while Goldcorp Inc. (TSX:G) improved by $1.96 to $42.76.

The March copper contract on the Nymex was unchanged at US$4.57, about half a cent lower from the record high the metal reached last Friday. The base metals sector was up 1.02% as Teck Resources (TSX:TCK.B) moved ahead $1.12 to $63.22 ahead of the release of its quarterly earnings after the close while Equinox Minerals (TSX:EQN) rose 14 cents to $6.79.

Corporate news helped lift New York markets after McDonald’s is reported a 5.3% rise in January sales at locations open more than a year, giving credit to its McCafe hot chocolate, Chicken McNuggets and the addition of oatmeal to the menu. Its shares gained 2.6% to US$ 75.36.

Walt Disney, (NYSE:DIS) which reported results after markets closed, reported profits of 68 cents per share, beating analyst estimates of 56 cents per share. Its shares closed at $41.18.

New York markets were positive with the Dow Jones industrial average up 71.52 points to 12,233.15.

The Nasdaq composite index was up 13.06 points to 2,380.88 while the S&P 500 index rose 5.52 points to 1,324.57.

In other corporate news, aerospace parts maker Heroux-Devtek Inc. (TSX:HRX) says it has signed a $175-million, seven-year contract with Bombardier to make structural parts for all of the company’s planes. Its shares jumped 56 cents to $8.18.

Silvermex Resources Inc. (TSX:SLX) shares gained 50 cents to 90 cents as it said that its market capitalization grew 800% in fiscal 2010 from $24.5 million to $195 million. The company says it has set aside $13.4 million to develop its La Guitarra silver mine in Mexico.