Tsx CALM As TrAders eYe u.s. debT TALKs

TORON TO • The Toronto stock market closed little changed Friday following a strong advance in the previous session with traders encouraged by the fact that Republicans and Democrats are finally negotiating an extension to the U.S. debt limit.

The S&P/TSX composite index edged 2.3 points lower to 12,892.11, pressured by falling gold stocks as optimism about ending the U.S. government impasse pushed bullion sharply lower.

The Canadian dollar was up US0.39¢ to US96.58¢ as job creation for September narrowly beat modest expectations and the unemployment rate fell to the lowest level since December 2008.

Statistics Canada said job creation came in at 11,900 last month while the jobless rate fell 0.2 of a point to 6.9% as fewer young people looked for work. Economists had been looking for the economy to have created about 10,000 jobs in September after cranking out almost 60,000 in August.

U.S. indexes added to big gains registered Thursday, with the Dow Jones industrial average climbing 111.04 points to 15,237.11, Nasdaq ahead 31.13 points to 3,791.87 and the S&P 500 index up 10.64 points at 1,703.2.

North American markets initially surged after Republican House Speaker John Boehner proposed extending the debt limit through Nov. 22, conditioned on President Barack Obama agreeing to negotiate over spending cuts and the government shutdown.

Hopes rose that the U.S. would avoid a possible default after the current borrowing limit expires on Oct. 17.

“The sentiment changed about 180 degrees,” said Bob Gorman, chief portfolio strategist at TD Waterhouse. But he cautioned that it’s far too early to sound the all-clear on the debt ceiling issue.

“The probability is extremely high that ultimately something gets sorted out here, [but] they are so far apart from an ideological standpoint that negotiations could be quite difficult. So I wouldn’t be surprised to see sentiment worsen in the next couple of trading days, particularly if you don’t see something a little firmer over the course of the weekend.”

Mr. Obama met with GOP senators late Friday morning. Senate Republican leader Mitch McConnell said the session with Mr. Obama was useful and he hoped that Senate Republicans could find a way out of the impasse.

Utilities led advancers, up 1.3% as Atlantic Power Corp. ran up 25¢ to $5.01.

Oil prices fell with the November crude contract on the New York Mercantile Exchange down US99¢ to US$102.02 a barrel but the energy sector rose 0.46%. Imperial Oil Ltd, advanced 47¢ to $45.12.

The gold sector was the weakest component, down about 3% as December bullion faded US$28.70 to US$1,268.20 an ounce. Barrick Gold Corp. dropped 73¢ to $17.81.

The base metals sector was flat even as December copper gained US2¢ to US$3.27 a pound.

Optimism that a debt deal will be reached pushed the TSX up 1.04% this week while the Dow gained 1.09%.