Source: The Canadian Press
The Toronto stock market closed modestly higher Friday with the TSX failing to get much traction from an American jobs report which blew past expectations.

The S&P/TSX composite index closed 33.83 points higher at 12,144.92 as buying sentiment was tempered by a weaker than expected reading on the U.S. non-manufacturing sector and falling gold stocks.

At the same time, investors also took in some major deal making in the precious metals group.

The TSX Venture Exchange rose 34.71 points to 1,565.96.

The Canadian dollar was ahead 1.3 cents at 96.22 cents US.

The TSX had been up almost 100 points but gains were pared in the wake of a report from the Institute for Supply Management that its service sector index for August came in at 51.5, down from 54.3 July and lower than the 53.2 reading economists had expected.

“Still expanding, mind you, but at the slowest pace since October,” observed BMO Capital Markets senior economist Jennifer Lee.

“It was worrying to see the employment component (of the index) fall below 50 again,” which signals contraction.

The data took some of the shine from the U.S. Labour Department report that the U.S. private sector created 67,000 jobs last month, much higher than the 40,000 or so that analysts expected.

“However, longer term, we think that the jobs market remains challenged,” said Philip Petursson, director of institutional equities at MFC Global Investment Management, who added that the U.S. economy needs to generate at least 200,000 jobs a month.

The U.S. jobless rate edged up 0.1 of a percentage point to 9.6%.

The Canadian jobs report for August comes out next Friday.

Goldcorp Inc. (TSX:G) and Andean Resources (TSX:AND) announced a friendly agreement Friday under which Goldcorp is to acquire Andean for about C$3.6 billion. The deal appeared to trump a rival $3.4-billion bid by Eldorado Gold Corp. (TSX:ELD). Andean’s main asset is the Cerro Negro gold project in Argentina, estimated to contain 2.1 million ounces of gold and 20.6 million ounces of silver.

Andean shares soared $2.17 or 45% to $6.98 on very heavy volume of 73.9 million shares, while Goldcorp stock was down $1.69 at $44.49 and Eldorado was off 64 cents at $19.89.

Petursson noted the acquisition is another in a string in which companies have found it more efficient to pick up other miners and not just rely on developing new production.

“The exploration costs are increasing and the actual finds are decreasing so it is much easier for a company like Goldcorp, which wants to increase production, to go out and acquire,” he said.

Overall, the gold sector was the biggest sectoral drag on the TSX as bullion prices fell back following the U.S. jobs data.

The December gold contract faded $2.30 to US$1,251.10 an ounce. Barrick Gold lost 52 cents to C$47.09.

The base metal sector moved up 0.68% even as early gains in copper prices disappeared with the December copper contract on the Nymex unchanged at US$3.50 a pound. Teck Resources (TSX:TCK.B) climbed 92 cents to C$39.70 while Western Coal Corp. (TSX:WTN) rose 12 cents to C$4.44.

The energy sector lost much early lift as oil prices switched direction and the October crude contract on the New York Mercantile Exchange closed down 42 cents at US$74.60 a barrel. Cenovus Energy (TSX:CVE) shed 32 cents to C$29.35 while Talisman Energy (TSX:TLM) gained 24 cents to C$17.45.

The financials sector was the strongest group, up 1.34% with investors satisfied that Canada’s five biggest banks earned a combined $4.8 billion in third-quarter profit — 9% more than last year — as they cashed in on strong growth in mortgages, consumer and corporate loans and other retail operations.

TD Bank, which handed in earnings Thursday, gained $1.23 to $74.40, and Manulife Financial (TSX:MFC) climbed 37 cents to $13.23 on heavy volume of 10 million shares. Its shares have been hammered since early August when the insurer handed in a $2.4 billion quarterly loss.

Markets in Toronto and New York racked up strong gains this week with the TSX rising 2.23% to a three-and-a-half month high after a run of strong economic data from around the world earlier in the week, particularly manufacturing data out of the U.S. and China.

The Dow Jones industrial average jumped 127.83 points Friday to at 10,447.93 for a gain of 2.89% this week.

The Nasdaq composite index rose 33.74 points to 2,233.75 while the S&P 500 index gained 14.41 points to 1,104.51.

In other corporate news, remarks by Dubai’s police chief suggest a tough line in talks with BlackBerry maker Research In Motion Ltd. (TSX:RIM). Lt.-Gen. Dahi Khalfan Tamim says that worries about spying by the U.S. and Israel spurred plans to sharply limit BlackBerry services in the United Arab Emirates.

The UAE plans to block BlackBerry email, messaging and Web services Oct. 11 unless authorities can gain access to the encrypted data traffic — a warning that echoed similar threats by a number of other countries, including India. Nevertheless, RIM shares edged up a penny to $46.51.

Pacific Rubiales Energy Corp. (TSX:PRE) has struck an agreement to give a further interest in the Buganviles oil and gas block in Colombia to a South American subsidiary of Petrodorado Energy Ltd. (TSXV:PDQ).

The farm-out agreement allows Petrodorado to earn a larger participating interest in the Visure and Tuqueque prospects by covering all of Pacific Rubiales’ related costs. Pacific Rubiales shares lost 17 cents to $24.40, while Petrodorado shares were up half a cent at 36.5 cents.

Air Transat, the airline operated by Transat A.T. Inc. (TSX:TRZ.B), has reached a tentative 48-month labour contract with its pilots. Transat shares gained 10 cents to $12.60.

Packaged ice company Arctic Glacier Income Fund (TSX:AG.UN) announced Friday that a subsidiary has reached an agreement with authorities in Michigan to resolve allegations that it violated the state’s antitrust laws. Its units were up 15 cents at $1.80.