Source: The Canadian Press

The Toronto stock market closed higher Friday even as retail data raised fresh questions about the strength of the U.S. economic recovery.

The S&P/TSX composite index moved 31.07 points higher to 11,666.92 after the U.S. Commerce Department reported that retail sales for May were down 1.2% — the largest amount in eight months — against expectations for a gain of 0.2%.

The data is key because U.S. consumer spending accounts for three quarters of the country’s economy and a fifth of global economic activity. It added to disappointment over U.S. job creation in May and worry about how Europe’s fiscal crisis could impact the global economic rebound.

However, economists cautioned against reading too much into one report. BMO Capital Markets senior economist Jennifer Lee noted that “the May decline follows seven straight months of gains, gains made even when employment was still contracting.”

Meanwhile, the University of Michigan’s consumer sentiment index for June came in at 75.5, up from 73.6 in May.

The Canadian dollar was off 0.24 of a cent at 96.73 cents US, while the TSX Venture Exchange added 7.88 points to 1,460.79.

The TSX base metals sector led advancers, up 1.37%, as copper prices continued to benefit from a report by the Chinese government that showed China’s exports rose almost 50% in May, which raised hopes for increased demand for the metal.

The news was particularly welcome to investors concerned that China would inadvertently slow growth too much in an attempt to prevent its economy from overheating, thus hurting the global rebound.

The July copper contract on the Nymex moved ahead four cents to US$2.90 a pound. Teck Resources (TSX:TCK.B) gained 74 cents to C$34.93 while Quadra FNX Mining (TSX:QUX) ran up 15 cents to C$12.25.

The Toronto energy sector gained 0.6% even as the July crude contract on the New York Mercantile Exchange shed $1.70 to US$73.78 a barrel. The decline in oil prices followed three days of sharp gains on hopes for higher demand after data showed lower crude inventories in the United States. Suncor Energy (TSX:SU) climbed 36 cents to C$33.75 while Nexen Inc. (TSX:NXY) gained 34 cents to C$22.90.

Gold stocks also advanced as the August bullion contract in New York was $8 higher at US$1,230.20 an ounce. Barrick Gold Corp. (TSX:ABX) advanced 33 cents to C$44.56 while Eldorado Gold (TSX:ELD) climbed 32 cents to C$17.89.

The telecom sector was the weakest group, down 0.8% with BCE Inc. (TSX:BCE) off 71 cents at $31.28.

Consumer staples stocks were also weak as Loblaw Co. (TSX:L) fell 56 cents to $39.55.

New York markets finished higher despite the retail data, with the Dow Jones industrial average ahead 38.54 points at 10,211.07.

The Nasdaq composite index gained 24.89 points to 2,243.6 while the S&P 500 rose 4.76 points to 1,091.6.

Toronto and New York markets both racked up gains for the week.

The TSX was up 97 points or 0.84% while the Dow industrials gained 280 points or 2.8%, although both indexes are below where they started 2010 trading.

“There are the positives of still strong, robust earnings growth in the U.S., somewhat better than expectations, and low interest rates, which are likely to stay low for a period of time, and that’s supportive of equities,” said Steve Uzielli, portfolio manager, director Scotia McLeod Equity Advisory.

“And then countering that is what we think is very grave news coming out of Europe and the very real risk of slipping back into recession and if not, (the) worst-case scenario is some kind of a credit/banking crisis in Europe.”

In other economic news, Statistics Canada reported the that domestic industrial sector continued to recover in the first quarter. The agency said Canadian industries operated at 74.2% of their production capacity in the quarter, an increase from 71.3% in the fourth quarter of 2009 and their third straight quarterly increase.

But it’s still well below the 83.1% of the first quarter of 2007, after which the downward spiral began.

On the corporate front, shares in Com Dev International Ltd. (TSX:CDV) fell 44 cents or 18.88% to $1.89 after the company said it expects revenue growth to remain “minimal” for the rest of this year but remains hopeful over the longer term. The maker of high tech instruments for satellites also reported weaker year-over-year second-quarter results with net income of $4.1 million, compared with $4.8 million in the comparable 2009 quarter. Revenue was $60.4 million, down from $64.1 million.

Investors also took in earnings from the Canadian health sector.

Drug maker Patheon Inc. (TSX:PTI) posted a US$10.9-million profit or 8.4 cents per share for its latest quarter. Revenue was US$175.4 million, about 5% higher than the year-earlier comparable figure. Its shares gained 15 cents to $2.66.

Also, shares in Agrium (TSX:AGU) moved down 70 cents to $54.17 after an analyst at Bank of American downgraded the potash producer’s stock from buy to neutral.