Source: The Canadian Press

The Toronto stock market closed higher Friday as investors became more comfortable with China’s moves to deal with inflation and hoped for a quick resolution to the Irish debt crisis.

The S&P/TSX composite index rose 86.32 points to 12,956.33, while the TSX Venture Exchange was ahead 8.24 points at 1,995.87.

The Canadian dollar gained against the U.S. dollar, up 0.33 of a cent to 98.23 cents US, despite lacklustre price action for oil and metals.

Commodity prices were weak after the Chinese government told banks they must hold more reserves to combat inflation, which shot up last month to the highest level in more than two years.

There is also growing expectation China will raise key interest rates soon as part of the inflation fight. That has sparked fears that China’s economic growth could slow as a result.

Much hope has been pinned on China and other emerging economies helping pull western countries out of recession.

In particular, high Chinese demand for commodities has pushed up prices for oil and metals and taken resource stocks on the TSX higher.

“Really, global growth is dependent on emerging markets and so if the emerging markets were to falter, then we would all be in the soup,” said Blair Falconer, portfolio manager at HSBC Securities Canada.

The financial sector led gains, up 0.84% with Bank of Montreal (TSX:BMO) up $1.13 at $60.33, while Royal Bank (TSX:RY) rose $1.04 to $55.32.

Manulife Financial Corp. (TSX:MFC) shares headed 34 cents lower to $15.35 even as the insurer said it expects to nearly triple its net profits to $4 billion by 2015. Manulife has grappled with billions of dollars in losses since the recession pummelled stock markets, eroding the value of the insurer’s investments.

The December crude contract on the New York Mercantile Exchange fell 34 cents to US$81.51 a barrel, but the energy sector shook off early weakness to move up 1%. Suncor Energy (TSX:SU) advanced 34 cents to C$35.24 and Canadian Natural Resources (TSX:CNQ) climbed 50 cents to $40.49.

BlackBerry maker Research In Motion Ltd. (TSX:RIM) also provided lift to the TSX, rising $1.21 to $59.76 and helping send the tech sector up 0.71%.

The base metals sector was ahead 0.34% the December copper contract on the Nymex was unchanged at US$3.83 a pound. HudBay Minerals (TSX:HBM) shed 21 cents to C$7.81 while Teck Resources (TSX:TCK.B) rose 64 cents to $50.93.

Gold stocks were slightly higher even as December gold lost 70 cents to US$1,352.30 an ounce.

Meanwhile, Irish, European and International Monetary Fund officials were negotiating Friday over terms of a massive credit line for Ireland’s debt-crippled banks. Officials in Germany, France, Britain and Austria say Ireland should be prepared to raise its 12.5% tax on corporate profits.

They argue it’s not fair for Ireland to receive aid from EU partners while simultaneously sticking to a tax policy that amounts to unfair competition.

New York markets were higher as the Dow Jones industrial average gained 22.32 points to 11,203.55.

The Nasdaq composite index rose 3.72 points to 2,518.12 while the S&P 500 index was ahead 3.04 points at 1,199.73.

The TSX racked up a strong gain this past week despite volatility, up 207 points or 1.62%.

The Dow industrials on the other hand finished the week up a meagre 11 points.

In corporate news, the federal Competition Bureau wants more than $10 million of penalties levied against Rogers’ Communications Inc. (TSX:RCI.B) for allegedly using misleading advertising to promote its new Chatr discount talk-and-text mobile brand. Its shares added five cents to $37.15.

Construction and infrastructure development company Aecon Group Inc. (TSX:ARE) has been awarded a $279-million contract by Toronto Transit Commission to extend one of the city’s main subway lines northward. Its shares were up 33 cents at $10.30.

Perpetual Energy Inc. (TSX:PMT) shares rose 10 cents to $4.02 after it said Friday it has sold a group of shut-in gas reserves for $40 million.

H.J. Heinz Co. said growth in international markets such as Latin America as well as price increases and more demand for its ketchup helped second-quarter net income rise 9% to US$251.4 million. Revenue fell 1% to $2.61 billion.

Harrah’s Entertainment Inc. cancelled its initial public offering Friday, just three years after it went private. The casino operator was expected to price the offering on Thursday and begin trading on the Nasdaq this week. Harrah’s had said it hoped to raise as much as US$531 million to help with its heavy debt burden.

A Harrah’s spokeswoman said the company is not commenting beyond a brief statement announcing the cancellation and citing market conditions.