tsx up as traders speculate about fed

• The Toronto stock market closed higher Monday amid strong manufacturing data from the United States and Europe and major corporate acquisitions.

Traders also looked ahead to the major economic event of the week — the U.S. Federal Reserve’s meeting Wednesday when markets may find out what the central bank intends to do about cutting back on a key area of stimulus.

The S&P/TSX composite index gained 58.71 points to 13,184.41 while rising commodities helped push the Canadian dollar ahead 0.08 of a cent to 94.46¢ US.

U.S. indexes were up sharply as investors wait to see if the Fed will start to taper its monthly US$85-billion of bond purchases.

The Dow Jones industrials ran ahead 129.21 points to 15,884.57, the Nasdaq rose 28.54 points to 4029.52 and the S&P 500 index climbed 11.22 points to 1786.54.

Speculation about Fed intentions has grown considerably over the past couple of weeks in the wake of a string of strong economic data, particularly a solid employment report for last month. Also, a bipartisan committee struck a U.S. congressional budget bill, which would remove the threat of another government shutdown.

However, there are many in the markets who think the Fed will want to consider more economic data before making the decision to taper. And analysts point out that with inflation only running at an annualized rate of 1.1% in the fourth quarter, such weak price pressure could also serve to keep the Fed sidelined.

“Inflation prints continue to miss,” said Stephen Lingard, managing director, Franklin Templeton Multi-Asset Strategies. “The backdrop is, it’s still a very deflationary world and that may be the only thing at this point that prevents the Fed and other central banks from starting to taper.”

Many traders aren’t happy to see an end to the asset purchases as they have kept long-term rates low and supported a strong advance on many markets this year.

The TSX tech sector was ahead 1.5% and Constellation Software Inc. jumped $10.19 or 5.2% to $206.69 as it said it will pay the equivalent of about $350 million to acquire Dutch software company Total Specific Solutions (TSS) BV.

BlackBerry Ltd. shares rose 13¢ to $6.55 amid two high-level departures at the smartphone maker. BlackBerry’s executive vice-president in charge of global sales, Rick Costanzo, will be leaving by early next year. And Chris Wormald, vice-president of strategic alliances, will be gone by the end of this month. BlackBerry posts earnings on Friday.

The health sector was up 1.35% as Valeant Pharmaceuticals International Inc. announced a friendly deal to acquire Solta Medical Inc., a California-based company that makes medical devices used in cosmetic surgery procedures. Its offer of US$2.92 per share for all of Solta’s stock is valued at US$250-million. Valeant shares ran ahead $4.45 to $117.52.

The financials sector rose 0.65% as Royal Bank of Canada climbed 77¢ to $69.

The gold sector was ahead about 0.8% as traders weighed the chances of Fed easing. Barrick Gold Corp. improved by 29¢ to $18.05.