TSX heads higher amid hopes for U.S. job gains

The Canadian dollar slipped 0.05 of a cent to 100.04 cents US after the loonie closed above parity with the U.S. dollar Wednesday for the first time since late October.

New York markets were mixed as traders also took in testimony by U.S. Federal Reserve chairman Ben Bernanke on the health of the U.S. economy.

New York’s Dow Jones industrial average declined 11.12 points to 12,705.34. The Nasdaq composite index gained 11.41 points to 2,859.68 while the S&P 500 index edged 1.45 points higher to 1,325.54.

The U.S. Labour Department said that weekly unemployment applications fell by 12,000 to a seasonally adjusted rate of 367,000. The four-week average, a less volatile measure, dropped for the third straight week to 375,750.

That’s the second-lowest level for the four-week average since June 2008.

“The trend remains friendly and supportive of further gains in hiring,” said BMO Capital Markets senior economist Jennifer Lee.

“U.S. employers have been operating on a lean and mean scale over the past four years and are starting to boost their payrolls slowly but steadily.”

Adding to optimism about U.S. employment was a report from payroll firm ADP that suggests the American private sector created 170,000 jobs last month. Economists have been expecting a total of 150,000 new U.S. jobs in January.

Employment figures for Canada also come out Friday and economists expect out about 24,500 jobs were added on this side of the border during January.

The tech sector was the strongest TSX group with shares in Open Text Corp. (TSX:OTC) surging $7.68 or 14.58% to $60.34. The company, which sells software used by major companies around the world to manage their electronic documents, beat analyst estimates last quarter as profit rose to US$47.4 million and its revenue increased by 20.2% over the year-earlier period.

The TSX base metals sector rose 0.47% amid major dealmaking news.

Mining company Xstrata PLC confirmed Thursday that it is in merger discussions with commodities trader Glencore International PLC, a deal that would create an industry giant with around US$175 billion worth of revenues. Xstrata said that Glencore had proposed an all-share merger of equals. Glencore cautioned that there was no certainty of an offer being made.

The merged mining giant would operate businesses around the world, including major nickel mining and refining businesses in Canada, where Xstrata owns the former Falconbridge nickel company.

Metal prices backed off with copper down six cents to US$3.78. On the TSX, HudBay Minerals (TSX:HBM) gained 18 cents to $12.18 and Thompson Creek Metals (TSX:TCM) improved by 18 cents to $9.01.

The gold sector was ahead about 1.5% with April gold up $9.80 at US$1,759.30 an ounce. Barrick Gold Corp. (TSX:ABX) advanced 43 cents to $49.72.

Crude prices continued to weaken following data Wednesday showing that U.S. oil inventories rose much more than expected last week. The March crude contract on the New York Mercantile Exchange was down $1.25 to US$96.36 a barrel and the energy sector climbed 0.57%. Cenovus Energy (TSX:CVE) was up 43 cents to $37.72 and Canadian Natural Resources (TSX:CNQ) gained 32 cents to $40.48.

The financial sector was the lead decliner, down 0.45% as Royal Bank (TSX:RY) shed 35 cents to $52.93.

Shares in Scotiabank (TSX:BNS) fell 46 cents to $51.38 after the bank said Wednesday it plans to raise $1.5 billion in an offering of common shares that the bank said will be used to pay for recent acquisitions. The bank will sell 30 million shares at $50.25 per share.

Consumer discretionary stocks were also weak as Shoppers Drug Mart (TSX:SC) fell 35 cents to $40.20 while convenience store owner Alimentation Couche-Tard (TSX:ATD.B) gave back 58 cents to $29.80.

Also supporting market gains was testimony from U.S. Fed chairman Ben Bernanke to the House Budget Committee. He said lawmakers should balance their desire to cut deficits with policies that could help boost the weak economy in the short run.

Bernanke said Thursday in prepared testimony for the committee that he recognizes that huge budget deficits represent a serious threat to the economy. But he added that “policy-makers… should take care not to unnecessarily impede the current economic recovery.”

In other earnings news, Dow Chemical says it posted a US$20 million loss in the fourth-quarter because of a one-time charge that caused it to pay higher taxes at its Brazilian operations. The loss of two cents a share compared with a year-ago profit of $426 million, or 37 cents per share. Revenue rose two per cent to $14.1 billion. Dow shares were down 40 cents at $33.54.