TSX surges as commodities climb

The S&P/TSX composite index ran up 322.85 points to 11,780.07 while the TSX Venture Exchange gained 66.54 points to 1,480.19.

Rising commodity prices helped push the Canadian dollar up 0.22 of a cent to 96.36 cents US, adding to Wednesday’s surge of 1.34 cents.

U.S. markets also advanced as traders took in news of the death of Apple founder Steve Jobs at the age of 56. Jobs died Wednesday, a day after Apple unveiled its latest iPhone. Apple shares closed down a slight 88 cents to US$377.37.

New York’s Dow industrials gained 183.38 to 11,123.33. The Nasdaq rose 46.31 points to 2,506.82 while the S&P 500 index climbed 20.94 to 1,164.97.

The European Central Bank offered new emergency loans to banks on Thursday to help steady them through the government debt crisis.

The ECB will offer an unlimited amount of 12-month and 13-month loans to banks. That will provide financing for a longer period and shield them from turbulence in borrowing markets.

Traders were happy with the news as “the liquidity provisions will help the European banking system avoid a liquidity crunch,” said BMO Capital Markets senior economist Benjamin Reitzes.

However, he pointed out that “the measures won’t keep banks from facing questions about solvency.”

The ECB also decided to keep interest rates on hold despite fears of a sharp economic slowdown.

Markets sank earlier in the week amid signs of further procrastination and confusion among European leaders as they tried to get a handle on the continent’s debt crisis and, in particular, how to keep Greece from a disorderly default on its debt.

There is great concern that if Greece fails to pay its bills, it will spark a financial meltdown similar to the U.S. banking crisis of 2008.

Investors have been frustrated over what they perceive as a lack of urgency on the part of European leaders in dealing with the financial crisis, which has been brewing since early last year.

“Unfortunately, politicians, until they’re faced with a crisis that absolutely demands that they do something, would like to avoid it and they have been able to kick the can down the road all the time,” said Jim Muir, director at Fraser Mackenzie.

“It’s human nature.”

Renewed hope that European officials can contain the crisis pushed the December copper contract on the New York Mercantile Exchange up 14 cents to US$3.25 a pound and the base metals sector rose 8.53%.

Prices were also boosted by signs of growing demand from China, the world’s biggest copper consumer.

“It looks like the Chinese are slowly coming back to the market, buying corporate warrants which, in turn, they can take delivery down the road,” said Azim Hajee, senior trader with MF Global Canada.

A warrant is an instrument that gives the buyer the right to purchase a security at a specific price within a certain time frame.

“Up to now, they were staying out, saying they had plenty of copper.”

Worries that the global economy could be heading for another recession have sunk copper prices recently, driving them down 31% since the beginning of August to levels around US$3 a pound. Copper is widely viewed as a barometer for the health of the overall global economy since it is used in electronics, homes and infrastructure.

Teck Resources (TSX:TCK.B) gained $1.55 to C$35.32 and Quadra FNX Mining (TSX:QUX) climbed 92 cents to $10.20.

Shares of Ivanhoe Mines (TSX:IVN) jumped $2.03 or 13% to $17.57 after the company said an investment agreement for the Oyu Tolgoi gold and copper mine, made with the Mongolian government and partner Rio Tinto, has been reaffirmed.

Oil prices built on Wednesday’s surge of US$4 on data which showed an unexpected drop in U.S. inventories, which signalled demand may be improving. On Thursday, the November crude contract on the New York Mercantile Exchange was up $2.91 at US$82.59 a barrel.

The TSX energy sector was up 3.59% as Suncor Energy (TSX:SU) gained $1.19 to C$28.69 and Cenovus Energy (TSX:CVE) was up $1.51 at $33.71.

Gold stocks also advanced as the December bullion contract advanced $11.60 to US$1,653.20 an ounce on the Nymex. Barrick Gold Corp. (TSX:ABX) rose $1.50 to C$49.58 and Goldcorp Inc. (TSX:G) advanced $1.86 to $49.24.

Industrial stocks were also stronger as transportation giant Bombardier Inc. (TSX:BBD.B) improved by 16 cents to $4 while Canadian National Railways (TSX:CNR) climbed $2.32 to $72.81.

Canadian banks also got a lift from the move to strengthen European banks with the sector up two per cent.

Canadian banks don’t have high exposure to Europe but a Greek default would play havoc with the European financial system. Scotiabank (TSX:BNS) improved by 75 cents to $52.49 while TD Bank (TSX:TD) climbed $1.25 to $73.57.

There was also good news on the U.S. consumer front.

Retailers reported strong revenue gains for September, capping a solid back-to-school shopping season. But uncertainty remains about how consumers will spend during the crucial winter holidays.

Target Corp., Limited Brands Inc. and teen chain The Buckle Inc. reported strong increases that beat Wall Street estimates. There were some stragglers like Bon-Ton Stores Inc., which reported a decline.

In other corporate news, Franco-Belgian bank Dexia is in negotiations to sell off its Luxembourg affiliate to a group of international investors and the Luxembourg government. The move is likely to be the first step in a massive rescue and restructuring.

Dexia is highly exposed to some of Europe’s more indebted countries, including Greece and Italy. Fears that those countries could default are making other banks wary of lending to Dexia. As a result, Dexia is finding it increasingly difficult to fund its day-to-day operations.