TSX modestly higher, dollar slides again

TORONTO• The Toronto stock market closed slightly higher Friday after two days of big losses sparked by indications that the U.S. Federal Reserve is likely to start winding up a key element of its economic stimulus.

The S&P/TSX composite index edged up 27.08 points to 11,995.66, recovering a fraction of its losses after the U.S. central bank said it could wind down its bondbuying program by the middle of next year, which traders took to mean that higher interest rates are on the way.

Meanwhile, the Canadian dollar also added to recent losses, plunging 0.76 of a cent to 95.64 cents US — its lowest close since late November 2011 — amid a higher U.S. currency and data showing a disappointing read on retail sales and tame inflation.

U.S. indexes also closed mostly higher as buyers snapped up stocks also beaten down over the previous two days, with the Dow Jones industrials up 41.08 points to 14,799.4 and the S&P 500 index up 4.24 points at 1,592.43.

The Nasdaq was down 7.39 points at 3,357.25.

In economic news, Statistics Canada said that the annual inflation rate rose to 0.7 per cent in May while core inflation was stable at 1.1 per cent, both below expectations.

Canadian retail sales edged up 0.1 per cent to $39.5 billion in April, less than the 0.2 per cent that had been expected, following flat sales in March.