Source: The Canadian Press

The Toronto stock market closed sharply higher Thursday as good economic news from China sent commodity stocks higher on the resource-heavy TSX and helped curb worry that Europe’s debt crisis will seriously hamper the global recovery.

The S&P/TSX composite index jumped 185.21 points to 11,635.85, while the TSX Venture Exchange advanced 8.34 points to 1,452.91.

The Canadian dollar climbed 1.21 cents to 96.97 cents US.

The Toronto Stock Exchange’s base metals component led advancers, up 4.83% as the July copper contract on the New York Mercantile Exchange rose a cent to US$2.86 a pound. Teck Resources (TSX:TCK.B) was up $1.73 at C$34.19 while Western Coal Corp. (TSX:WTN) climbed 21 cents to C$4.79.

Railway stocks were up smartly alongside mining stocks, with Canadian National Railways (TSX:CNR) ahead $2.32 at $61.76.

The energy sector was up 2.3% as the June crude contract on the New York Mercantile Exchange gained $1.10 to US$75.48 a barrel, boosted by data from the U.S. Department of Energy that crude inventories fell last week. Suncor Energy (TSX:SU) rose 89 cents to C$33.39 while Canadian Natural Resources (TSX:CNQ) was ahead $1.41 at C$37.16.

Financial stocks were also stronger, with the segment ahead 1.6% as Royal Bank (TSX:RY) improved by 95 cents to $52.98 and Scotiabank (TSX:BNS) gained 97 cents to $49.66.

The TSX global gold sector was the sole decliner, down slightly as bullion prices fell further away from Tuesday’s record high close, down another $7.70 to US$1,222.20 an ounce. Barrick Gold Corp. (TSX:ABX) faded 32 cents to C$44.23.

China said exports rose 48.5% in May, while imports jumped 48.3% last month.

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

“China so far has been able to pull this off,” said John Apruzzese, partner and equity portfolio manager at Evercore Wealth Management in New York. “There’s more focus on Europe but I think it’s more about China.”

The Chinese data had been leaked on Wednesday. The news initially pushed commodity prices and the TSX higher but the Toronto market ended the session lower Wednesday partly due to selling pressure on the euro, which fell below the important US$1.20 threshold.

“That’s the one problem that we have had over the last week in particular,…we’ve had the markets start out fairly well but then big selloffs in the afternoon,” said Colin Cieszynski, market analyst at CMC Markets.

The euro has become an indicator of investor confidence in Europe’s economy. It has also heavily influenced global stock markets in recent weeks because of concerns that rising debt in countries like Greece, Spain and Portugal would upend the global recovery.

Late Thursday afternoon, the euro was trading at US$1.2141.

Wednesday’s late-day pullback also came as traders grew concerned about whether BP PLC would cut its dividend or even file for bankruptcy protection as it faces growing claims from the Gulf of Mexico oil spill.

On Thursday, BP shares rose almost 11% in New York to US$32.33 after plunging nearly 16% Wednesday.

In economic news, Canada’s trade picture improved in April as the country’s trade balance with the world went from a deficit of $236 million in March to a surplus of $175 million. The agency said merchandise exports declined 1% while imports fell 2.2% in April as a result of lower prices.

Export and import volumes actually rose for a third consecutive month, but at a slower pace than in the previous two months.

New York markets also moved higher following data showing that new claims for unemployment fell by a less-than-forecast 3,000 to a seasonally adjusted 456,000. Total claims last week dropped by the largest amount in almost a year. Total U.S. unemployment benefit rolls fell by 255,000 to 4.5 million.

The drop in total claims provides some hope that laid-off American workers are starting to find new jobs.

New York’s Dow Jones industrial average surged 273.28 points to 10,172.53. The Nasdaq composite index was up 59.86 points at 2,218.71, while the S&P 500 index rose 31.15 points to 1,086.84.

Cieszynski said there was relief over the announcement from the European Central Bank that it is leaving its key interest rate unchanged at 1% while the Bank of England said it was leaving its base interest rate at a record low of 0.5%.

“The big thing is that there were no negative surprises,” he said. “The action we’re seeing today suggests that people were really wondering what the European central banks were going to do.”

On the corporate front, shares in yoga wear retailer Lululemon Athletica (TSX:LLL) gained $1.12 to $42.10 after it reported that its first-quarter net profits tripled to $19.6 million, compared with earnings of $6.5 million a year ago. Net revenues for the first quarter rose 69.3% to $138.3 million.

Shares in Storm Exploration Inc. (TSX:SEO) rose $2.13, or 18.52%, to $13.63 after the Calgary-based company said it has agreed to be purchased by junior oil and gas producer ARC Energy Trust (TSX:AET.UN) for $680 million. ARC units were off 74 cents at $20.15.

Discount retailer Dollarama Inc. (TSX:DOL) said its first-quarter profit doubled to $22.4 million as sales increased by 14% from the same time last year. Its shares were 20 cents higher at $25.45.

Travel company Transat A.T. Inc. (TSX:TRZ.B) said intense competition and a strong Canadian dollar had a negative impact on its latest quarterly financial results. Net income fell to $6.2 million, down from $42.2 million in the year-earlier quarter. Transat’s revenue fell to just under $1.1 billion — a decline of $69 million from last year’s second quarter. The results were better than expected and Transat’s shares climbed 17 cents to $10.20.

Shareholders of Mega Brands (TSX:MB) have approved a reverse stock split that’s designed to boost the toymaker’s stock price. Mega Brands says the share consolidation will reduce the 327.3 million shares to between 16.4 million and 32.7 million depending on what the board approves. Its shares were up half a cent at 44.5 cents.