Source: The Canadian Press

The Toronto stock market closed little changed Friday as a weaker than expected reading on American manufacturing erased some of the early optimism coming from strong Chinese economic data.

The S&P/TSX composite index dipped 5.57 points to 12,363.08 while the TSX Venture Exchange climbed 36.53 points to 1,744.79.

A weak American currency and strong commodity prices pushed the Canadian dollar up 0.81 of a US cent to a two-month high of 97.99 cents US.

Both oil and copper prices advanced sharply after the state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 53.8 in September from 51.7 in August. Numbers above 50 show manufacturing activity expanding.

Strong economic growth in China has been a huge benefit to commodity prices and the resource-heavy Toronto stock market. Copper has benefited, in particular, with prices up more than 10% this year and they briefly hit a two-year high Friday.

But markets fell back following the latest reading on the U.S. manufacturing sector. The Institute for Supply Management’s index on the sector fell to 54.4 last month from 56.3 in August. Although a reading above 50 in that index also indicates expansion, economists had looked for it to come in at 54.5.

“The data for the ISM was in line,” said Steve Uzielli, portfolio manager ScotiaMcLeod Equity Advisory. “That being said, (it) doesn’t mitigate the fact that things are rolling over a little bit.”

The employment component was a disappointment, falling from 60.4 to 56.5 a week before the release of the non-farm payrolls report for September.

“We think the employment data will be one of the last data points to improve when the economy starts to improve and we don’t think it’s started yet,” Uzielli said.

“Maybe stabilizing to some extent but employment will be a stubbornly persistent weak number.”

The December copper contract on the New York Mercantile Exchange gained four cents to US$3.69 a pound after going as high as US$3.70, sending the base metals group up 1.47%. Teck Resources (TSX:TCK.B) rose $1.03 to C$43.35 while Quadra FNX Mining (TSX:QUX) climbed 32 cents to C$15.42.

The energy component advanced 1.09% as the November crude contract on the Nymex gained $1.61 to US$81.58 a barrel. Canadian Natural Resources (TSX:CNQ) ran ahead $1.18 to C$36.77 while Suncor Energy (TSX:SU) was 43 cents higher at C$33.93.

Crude prices were also supported by data Wednesday that showed a drop in commercial crude inventories of 500,000 barrels last week. Analysts had forecast an increase of 2.2 million barrels.

Gold stocks were mixed as the weaker greenback helped drive the December bullion contract in New York ahead $8.20 to yet another record close of US$1,317.80 an ounce. Barrick Gold Corp. (TSX:ABX) climbed 39 cents at C$47.94 while Goldcorp Inc. (TSX:G) faded 15 cents to C$44.55.

Negative pressure on the TSX came largely from blue chips, with the financial sector was down 0.68%. Scotiabank (TSX:BNS) off 66 cents at $54.26 and TD Bank (TSX:TD) eased 87 cents to $73.58.

Telecoms were also weak as BCE Inc. (TSX:BCE) gave back 47 cents to $33.01.

New York markets were also off early highs, although other data showed that U.S. consumer spending rose moderately in August while incomes increased by the largest amount in eight months.

The U.S. Commerce Department said consumer spending increased 0.4% in August, matching the July increase. Incomes were up 0.5%, better than the 0.2% rise in July and a flat reading in June. The gain was propelled by the resumption of extended unemployment benefits.

The Dow Jones Industrial Average was ahead 41.63 points at 10,829.68.

The Nasdaq composite index added 2.13 points to 2,370.75 while the S&P 500 index rose 5.04 points to 1,146.24.

North American stock markets entered October trading with strong gains from September, which has a reputation as the worst trading month of the year.

Mostly positive readings from economic data on U.S. manufacturing, home sales and jobs helped push the Dow Jones industrial average 7.7% higher in September, while the TSX gained a more modest 3.8% for the month.

In trading this past week, the TSX advanced 1.29% or 158.22 points, while the Dow dipped 0.28% or 30.58 points.

In corporate news, Alimentation Couche-Tard (TSX:ATD.B) shares declined 54 cents to $22.47 after the Quebec-based convenience store operator ended its six-month courtship of Casey’s General Stores in the United States. Couche-Tard had offered US$2-billion for the chain but Canada’s largest convenience store operator was forced to bow to the reality that the U.S. retailer would not engage in talks.

CN Rail (TSX:CNR) shares declined 45 cents to $65.35 as the railway announced it had suspended plans to impose new work rules on Monday as long as negotiations continue with the union representing 2,700 conductors, yardsmen and traffic co-ordinators.

Centerra Gold Inc. (TSX:CG), the Toronto-based international gold producer, said unionized workers at its Kumtor mine in the Kyrgyz republic began a strike Friday. Production at the mine has been suspended and the company is in talks with the union. Centerra shares dipped seven cents to $16.53.

Mid-tier miner Gammon Gold Inc. (TSX:GAM) has made a friendly, US$288-million bid for New York-based Capital Gold Corp. (TSX:CGC), topping an earlier hostile offer from Timmins Gold Corp. Gammon shares were down 18 cents at $6.99 while Capital shares were off four cents at $4.91.