Source: The Canadian Press

The Toronto stock market closed slightly higher Tuesday as commodity stocks continued to find lift in the wake of strong manufacturing data in China and the United States.

The S&P/TSX composite index moved up 16.61 points to 12,681.42 amid investor caution ahead of a much-anticipated U.S. Federal Reserve meeting that is expected to result in another round of major economic stimulus and the American midterm elections.

“They’re two huge catalysts that we’ve been waiting for, for weeks now,” said Jean Francois Dion, portfolio adviser, Canadian equities at RBC Dominion Securities.

“I think some of the good news we got over the past few days — the better than expected purchasing managers index numbers — helped boost sentiment a little bit, but not a whole lot as the overall market is lacking direction and waiting for some real news out of the U.S. tonight and tomorrow.”

The TSX Venture Exchange edged up 8.33 points to 1,942.41.

The Canadian dollar gained ground as the U.S. dollar lost strength ahead of Wednesday’s Fed announcement, rising 0.64 of a cent to 99.06 cents US.

The consensus in the markets is that the central bank will announce another round of quantitative easing in the form of monthly asset purchases of around US$100 billion per month over the next six months at the conclusion of its two-day meeting on Wednesday.

The Republicans were expected to gain at least partial control of Congress by winning control of the House of Representatives in Tuesday’s elections. Such a victory could set up a scenario that leads to gridlock in Washington, meaning there could be a slowdown in new government spending and on regulatory reform.

Oil prices advanced for a second day to their highest close in almost six months after manufacturing data from China and the U.S. pointed to continuing expansion in the sector and raised demand expectations.

The weaker U.S. currency also helped push the December crude contract on the New York Mercantile Exchange up 95 cents to US$83.90 a barrel, its highest close since May 3. The energy sector gained 0.88% and Canadian Natural Resources (TSX:CNQ) climbed 69 cents to C$37.86.

Talisman Energy Inc. (TSX:TLM) added 67 cents to $19.11 as the company reported net income in the third quarter of $121 million, a four-fold increase from $30 million a year earlier. The Calgary-based oil and gas company also said that it expects to produce more oil and gas this year than previously anticipated as it ratchets up output from its vast shale holdings in North America.

The base metals sector advanced 1.06% amid higher copper prices with the December contract on the Nymex ahead cents five cents at US$3.84 a pound. Equinox Minerals (TSX:EQN) was up 21 cents to C$5.88 while Sherritt International (TSX:S) climbed 25 cents to $8.48.

Gold stocks made modest advances as the December gold contract in New York closed up $6.30 to US$1,356.90 an ounce. Goldcorp Inc. (TSX:G) gained 29 cents to C$45.38.

Consumer staples led declining segments, with beverage company Cott Corp. (TSX:BCB) down 33 cents at $8.20.

New York markets pushed ahead with the Dow Jones industrial average up 64.1 points at 11,188.72.

The Nasdaq composite index was ahead 28.68 points at 2,533.52 while the S&P 500 index advanced 9.19 points to 1,193.57.

In other corporate news, Potash Corp. of Saskatchewan (TSX:POT) was in focus after Industry Minister Tony Clement said “no recommendation has been provided by Investment Canada officials” on approval for BHP Billiton’s hostile US$38.6-billion hostile bid for the fertilizer giant. His comment followed published reports that Investment Canada had tentatively approved the bid.

A decision by the federal government on BHP’s bid is expected Wednesday and PotashCorp shares ticked $2.43 lower to $146.27 .

Suncor Energy (TSX:SU), Canada’s largest oil and gas company and a growing player in wind energy, has struck a deal to acquire 55 advanced wind turbines from General Electric (NYSE:GE), one of the world’s largest industrial companies. Financial terms of the deal were not disclosed and Suncor shares added three cents to $33.06.

Bridgewater Systems (TSX:BWC) shares rose 13 cents to $8.68 as it said third-quarter net income doubled to $3.4 million. The Ottawa-based technology company raised its 2010 profit target range as revenue increased by 52% over the same time last year.

Shares in Baja Mining Corp. (TSX:BAJ) were down two cents to $1.16 after the Vancouver-based mine development company said it would raise $160 million in a bought deal financing. The company plans to use the proceeds for construction of its majority-owned Boleo project in Mexico.

Pfizer Inc. shares dipped 16 cents to US$17.46 after its third-quarter revenue fell short of forecasts. It did, however, beat profit forecasts for the quarter and the pharmaceutical company raised its full-year outlook.