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No one exactly pounded the table on Wednesday and declared an end to U.S. recession fears. But the surprising strength of U.S. retail sales for January, up 0.3 per cent against a consensus estimate of a decline of 0.3 per cent, was good enough for investors. They nibbled on stocks early in the day and pounced on them later, sending key North American stock market indexes higher.

The S&P/TSX composite index closed at 13,282.30, up 194.92 points or 1.5 per cent. The index was driven by Research In Motion Ltd., which rose 5.3 per cent, along with energy and gold producers. But the rally also had a lot of help from yesteryear's winners: Bombardier Inc. rose 7.5 per cent and Nortel Networks Corp. shot up 12.4 per cent on speculation the company will merge with Motorola Inc.

In the United States, the Dow Jones industrial average closed at 12,552.24, up 178.83 points or 1.5 per cent. The broader S&P 500 closed at 1367.21, up 18.35 points or 1.4 per cent.

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The key question, though, is whether a recession has really been avoided. Economists who weighed in on the issue throughout the day were not exactly upbeat, partly because the retail sales figures for January incorporated downward revisions to November and December figures, making the up-tick appear better than it really is.

"Although the net changes reported for retail sales in January were better than expected, especially when vehicles are included, they came off of a reduced base," said Jan Hatzius, an economist at Goldman Sachs, in a note to clients. "When the revisions are factored into the mix, this report underscores the weakening trend in consumer spending."

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