Source: The Canadian Press

The Toronto stock market posted a solid gain Friday amid news that inflationary pressures eased considerably last month while retail sales continued to climb.

The S&P/TSX composite index added 78.77 points to 12,239.64 after choppy trading earlier in the day. Toronto’s main index was up 1.4% on the week.

The market found its footing after Statistics Canada said the country’s national inflation rate slipped by two-tenths of a point to 1.4%, and the closely watched Bank of Canada core rate fell even further – by four-tenths of a point to 1.7% in March.

The central bank had said Tuesday it could raise its key lending rate as early as June 1 to cool a rapidly growing economy with its inflationary potential. And speculation that the bank could raise its rate by as much as half a percentage point put pressure on markets earlier this week.

However, today’s inflation report pretty much negates that possibility, said Gavin Graham, global strategist at Excel Funds Management.

“The fact that core inflation fell back under 2% means that the worries about the half (percentage point) increase in June have been put to bed,” Graham said.

The TSX was also lifted by news that retail sales increased for a third straight month to $36 billion in February thanks in large part to higher sales at new car dealers.

The inflation report sent the dollar back below parity with the greenback, falling 0.09 of a cent to 99.91 cents US.

The June crude contract on the New York Mercantile Exchange jumped $1.42 to US$85.12 a barrel amid relief that Greece has formally asked for a bailout from the eurozone and the International Monetary Fund. The Toronto energy sector gained 1.54%, while shares in Suncor Energy Inc. (TSX:SU) added 67 cents to C$34.53.

The June bullion contract added $10.80 to US$1,153.70 an ounce. Barrick Gold Corp. (TSX:ABX) shares gained 23 cents to C$40.41.

The base metals sector added 0.27% as the May copper contract on the Nymex gained 2.65 cents to US$3.51 a pound. Shares in Teck Resources Ltd.(TSX:TCK.B) fell 22 cents to C$43.77 after gaining more than five% Thursday following an announcement that the company will reinstate its dividend.

The financial sector was flat as the G20 finance ministers met in Washington to discuss a hotly debated proposal for a global bank tax. Shares in Toronto-Dominion Bank (TSX:TD) slipped 16 cents to $76.80.

The TSX Venture Exchange jumped 18.87 points to 1,670.92.

In New York, the major indexes also moved higher as the U.S. Commerce Department said sales of new homes in the United States surged 27% last month, bouncing off February’s record low and blowing past expectations as better weather and government incentives boosted sales.

This was offset by a report that new orders for big-ticket manufactured goods dropped sharply last month due to a plunge in demand for commercial aircraft. However, excluding the volatile transportation category, orders rose by 2.8%, the most since the recession began.

The Dow Jones industrial average added 69.99 points to 11,204.28. The S&P 500 gained 8.61 points to 1,217.28, while the Nasdaq rose 11.08 points to 2,530.15.

In Canadian corporate news, shares in Cipher Pharmaceuticals Inc. (TSX:DND) gained 20 cents or 16% to $1.45 after the Toronto-area company said it narrowed its first-quarter loss and increased revenue due to higher prescription sales of Lipofen, which is used to treat a cholesterol disorder.

The U.S. parent of Sears Canada Inc. (TSX:SCC) said it was moving to increase its stake in the Canadian department store chain above 90%, a threshold that would allow for a forced privatization of the national retailer. Shares in Sears Canada lost 52 cents or 1.8% to $29.

And International Forest Products Ltd. (TSX:IFP.A) said it will reopen one of its B.C. sawmills as dramatic increases in pricing and demand continue to take root in the lumber market. Shares in Interfor lost 13 cents or more than 2% to $6.02.