TSX closes higher on U.S. consumer data

A lower U.S. dollar and better demand prospects took oil closer to the US$100 mark as the January contract on the New York Mercantile Exchange advanced $1.58 to US$99.79 a barrel.

The Canadian dollar benefited from positive sentiment for a second day, rising 0.48 of a cent to 97.06 cents US.

The Dow Jones industrial average gained 32.62 points to 11,555.63 as data showed that Americans’ confidence in the economy in November rose to its highest level since July. The U.S. Conference Board’s Consumer Confidence Index rose 15 points to 56.0, up from a revised 40.9 in October.

However, that is way below the reading of 90 which indicates the economy is on solid footing.

The Nasdaq composite index slipped 11.83 points to 2,515.51, dragged down by Corning Inc., which was down 10.75% to US$13.19 after the company cut its fourth-quarter earnings outlook due to a contract loss and price decline in glass. The company said that sales of its Gorilla Glass, which is used in smartphones and other mobile devices, will fall by 25% compared with the last quarter.

The S&P 500 index gained 2.64 points to 1,195.19.

The gain added to a strong advance Monday amid reports that Europe’s leaders were considering extreme steps that were unthinkable just weeks ago, such as having countries cede control over their budgets to a central European authority.

The 17 finance ministers of the countries that use the euro met in Brussels on Tuesday to discuss that option.

Another plan calls for some kind of elite group of euro states that would guarantee one another’s loans but require strong fiscal discipline from anyone wanting membership.

However, traders were wary that hopes for a resolution will translate into major gains on markets since there have been so many promises over the months from eurozone officials that the debt crisis has been contained when, in fact, it keeps getting worse.

“It’s like the boy who cried wolf. We’ve seen this before, we’ve seen their plans — we’ve seen all this — but yet it doesn’t seem to come to fruition,” said Allan Small, senior investment adviser at Dundee Wealth.

“We’re hungry for details as to how these Europeans are going to go forward with the stability fund and recapitalizing the banks and so on. But we don’t have details.”

The finance ministers’ meeting did produce an approval for the next instalment of Greece’s bailout loan amounting to €8 billion. Without that money, Greece would have run out of cash before Christmas, leaving it unable to pay its employees or provide services.

The sense of urgency that a fix is badly needed was seen at a bond auction Tuesday morning where Italy’s borrowing rates skyrocketed.

Though Italy easily raised €7.49 billion, the yield on its three-year bonds surged to 7.89%, a full 2.96 percentage points higher than last month, while yields on 10-year bonds spiked to 7.56%, up 1.5 percentage points from October. Both rates are unsustainable for very long and are on par with levels that forced other eurozone governments to seek bailouts.

Italy is labouring under debts amounting to €1.9 trillion, or some 120% of its national income. The country, which is the eurozone’s third-largest economy, is considered to be too big to be bailed out under current rescue arrangements.

An Italian default would create devastating consequences for the eurozone and send shockwaves throughout the global economy.

Investors also took in news that AMR Corp., the parent of American Airlines, and its regional affiliate, American Eagle, are filing for Chapter 11 bankruptcy protection. American says labour contract rules force it to spend at least US$600 million more than other airlines. AMR stock plunged 84% to 26 cents US.

On the TSX, the energy sector rose 1.75% with Canadian Natural Resources (TSX:CNQ) ahead $1.15 to $36.35 and Suncor Energy (TSX:SU) up 44 cents to $29.35.

The base metals sector moved up 1.5% as the March copper contract was up two cents at US$3.39 a pound. Teck Resources (TSX:TCK.B) climbed 41 cents to C$34.27 and Ivanhoe Mines (TSX:IVN) rose 67 cents to C$20.62.

The tech sector ran up 1.46% with Research In Motion Ltd. (TSX:RIM) up 94 cents to $17.95 . The BlackBerry-maker announced plans to offer software to companies that will allow them to use iPhones and other mobile devices on RIM’s secure network starting in the first quarter of next year.

The gold sector was also higher with the February gold contract on the Nymex ahead $4.40 to US$1,718.90 an ounce. Goldcorp Inc. (TSX:G) gained 52 cents to C$51.24.

Financials also provided lift to the TSX with Bank of Montreal (TSX:BMO) ahead 67 cents to $57.41 and TD Bank (TSX:TD) up 73 cents to $69.63.

In other corporate news, Calgary-based energy company Nexen Inc. (TSX:NXY) said it will create a partnership with a consortium led by Inpex Corp. of Japan to develop shale gas lands in northeast British Columbia. Nexen will sell a 40% working interest in its northeast B.C. assets and will remain the operator. The 40% interest will raise $700 million, with half up front and a 50% capital carry. Nexen shares gained 68 cents to $15.95.