TSX advances amid strong manufacturing data

Statistics Canada said manufacturing sales rose two per cent in November to $49.6 billion, the fourth increase in five months. Economists had expected a rise of 1.2%. The agency says the gains reflected higher sales in the machinery, petroleum and coal product and motor vehicle industries.

The Canadian dollar edged 0.02 of a cent lower to 98.87 cents US.

U.S. markets were higher as traders took in strong earnings from financial heavyweights Bank of America and Morgan Stanley.

However, a disappointing reading from the Philly Fed’s manufacturing index took some of the shine off the session. The index edged up to a reading of 7.3 during January, short of the 9.3 expected by economists.

The Dow Jones industrial average gained 45.03 points to 12,623.98. The Nasdaq composite index was up 18.62 points to 2,788.33 and the S&P 500 index rose 6.46 points to 1,314.5.

Morgan Stanley lost US$275 million or 15 cents a share in the fourth quarter on a settlement with bond insurer MBIA, but the investment bank’s loss was less than the 43-cent loss Wall Street had been expecting. The bank reported a profit of $600 million in the same period a year ago. Its shares were up 93 cents to US$18.28.

Bank of America shares were up 16 cents to US$6.96 as it made $2 billion in the last three months of 2011 from selling its stake in a Chinese bank and selling debt. That offset losses and higher legal expenses in its mortgage business.

“You’re seeing money go back into the financials,” said Sid Mokhtari, market technician at CIBC World Markets.

“And when the financials are stable, I think the market tends to become stable.”

The financials sector rose 1.6% in the wake of the American banking reports as Royal Bank (TSX:RY) gained 65 cents to $53.10 and TD Bank (TSX:TD) climbed $1.02 to $78.22.

Scotiabank (TSX:BNS) is in the early stages of hunting for buyers interested in its skyscraper headquarters in downtown Toronto. The second-tallest tower in the country will hit the auction block soon, with the bank hoping to fetch $1-billion for it. That would make it the biggest commercial real estate deal in Canadian history. Scotiabank shares gained $1.42 to $53.98.

The energy sector gained 0.49% as the February crude contract on the New York Mercantile Exchange slightly lower. Crude lost 20 cents to US$100.39 a barrel after the U.S. Energy Department said Thursday that U.S. crude oil supplies declined about one per cent last week. But gasoline supplies rose 1.7% and demand over the past four weeks is down 6.1% from a year ago.

Cenovus Energy (TSX:CVE) gained 50 cents to C$36.05 and Canadian Natural Resources (TSX:CNQ) rose 56 cents to $39.32.

The base metals sector gained 0.48% with the March copper contract up five cents to US$3.81 a pound. The metal, viewed as an economic barometer since it is used in so many businesses, has risen about 10 cents this week following stronger than expected fourth-quarter growth in China. China is the world’s biggest copper consumer. The data raised hopes Chinese authorities would loosen lending requirements in order to encourage growth.

Teck Resources (TSX:TCK.B) was $1.30 higher to C$42.22.

Ivanhoe Mines Ltd. (TSX:IVN) shares gained 23 cents to $19.54 a day after it said it’s scrapping its shareholder rights plan and that global miner Rio Tinto PLC is free to increase its stake in the company above the current 49% if it chooses to do so. Ivanhoe owns 66% of Oyu Tolgoi project in Mongolia, one of the biggest copper developments in the world, while the Mongolian government owns 34%.

The gold sector was the biggest weight, down about two per cent as bullion prices backed off with February contract in New York down $5.40 at US$1,654.50 an ounce. Barrick Gold Corp. (TSX:ABX) lost $1.55 to C$46.97 while Goldcorp Inc. (TSX:G) faded 56 cents to $44.89.

Traders also took in further evidence that the U.S. job market is strengthening. The Labour Department said that the number of people seeking unemployment benefits plummeted last week by 50,000 to 352,000, the fewest since April 2008. The four-week average, which smooths out fluctuations, dropped to 379,000. That’s the second-lowest such figure in more than three years.

Elsewhere on the corporate front, Apple Inc. has launched its attempt to make the iPad a replacement for a satchel full of textbooks by starting to sell electronic versions of a handful of standard high-school books. The electronic textbooks, which include “Biology” and “Environmental Science” from Pearson and “Algebra 1” and “Chemistry” from McGraw-Hill, contain videos and other interactive elements. Apple shares slipped $1.36 to US$427.75 after earlier hitting a new high of US$431.37.