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At midday: Stocks surge as GOP offers short-term debt limit extension

The Toronto stock market registered a solid gain Thursday on hopes that a solution may be at hand to the debt impasse in Washington that would head off a possible default.

The S&P/TSX composite index ran up 153.19 points to 12,883.52 after House speaker John Boehner said Republicans are offering legislation that will allow for a temporary increase in the debt ceiling.

Boehner said the proposal involves extending the government's ability to borrow money through Nov. 22 – but only if President Barack Obama agrees to negotiate over ending the partial government shutdown and a longer-term increase in the debt ceiling.

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The Canadian dollar rose 0.09 of a cent to 96.3 cents US.

U.S. indexes were sharply higher as the Dow Jones industrials surged 223.87 points to 15,026.85, the Nasdaq shot up 67.08 points to 3,744.86 and the S&P 500 index rose 27.04 points to 1,683.44.

The strong gains followed a string of declines that reflected a growing sense of unease as the U.S. heads toward an Oct. 17 deadline when the government starts to run out of money to pay creditors.

"They (investors) don't really care whether it's a structural fix or a long-term fix or another push off the fiscal cliff, if it's any type of positive tone in terms of willingness to negotiate in good faith," said Kevin Headland, director, portfolio advisory group at Manulife Asset Management.

Markets have been under pressure since Oct. 1 when a budget impasse resulted in a partial shutdown of the U.S. government.

Republicans have been demanding changes to Obama's signature health-care legislation and spending cuts in return for a funding measure that would reopen the government and increase the debt limit.

Boehner and other GOP leaders were set to meet Obama later in the day (at 4:35 p.m. EDT).

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Most U.S. government reports have been choked off as a result of the government shutdown, including the key September jobs report which was to have come out last Friday.

However, there was a rare bit of U.S. economic data on Thursday as the Labor Department said that the number of people applying for unemployment benefits jumped by 66,000 last week to a seasonally adjusted 374,000.

The spike was largely because California processed a huge backlog of claims and because the partial government shutdown prompted some contractors to cut jobs.

Prices for oil and copper advanced on word of the possible Washington gridlock fix.

Base metal stocks led TSX advancers, up 1.5 per cent with December copper up one cent at US$3.24 a pound. Worries about the economic fallout from the Washington budget impasse have impacted commodity prices sharply, with copper losing six cents Wednesday. Teck Resources (TSX:TCK.B) climbed 32 cents to C$26.74.

The energy sector gained 1.45 per cent as the November crude contract on the New York Mercantile Exchange moved up $1.31 to US$102.92 a barrel. Canadian Natural Resources (TSX:CNQ) advanced 91 cents to C$32.94.

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The industrials component ran up 1.25 per cent and Canadian National Railways (TSX:CNR) rose $1.66 to $109.60.

Financials gained 1.1 per cent as Royal Bank (TSX:RY) rose 88 cents to $67.28.

The gold sector erased early losses to move slightly higher even as December bullion fell $6.30 to US$1,300.90 an ounce. Iamgold (TSX:IMG) improved by 14 cents to C$4.82.

The tech sector moved up 0.8 per cent. BlackBerry says its office in Halifax will shut down in January, a move that will lay off 350 workers. The company (TSX:BB) says the closure is necessary in order to refocus its business to generate profits in a competitive mobile phone industry. Its shares lost eight cents to $8.36.

Wi-LAN Inc. (TSX:WIN) shares rose 15 cents to $4.05 after it said it has reached a settlement in its patent dispute with Sierra Wireless Inc. The Ottawa-based patent-licensing company says Sierra has agreed to enter into a multi-year licence to Wi-LAN's patent portfolio.

Elsewhere on the corporate front, telecom giant Rogers Communications (TSX:RCI.B) is trying to determine what caused a massive outage over several hours Wednesday night. Both wireless voice and text messaging services were down. Rogers has about 10 million wireless customers across Canada. Rogers shares gained 56 cents to $45.74.

Space technology company Com Dev International Ltd. (TSX:CDV) says it has received its largest commercial award ever, a contract "in excess of $65-million" to supply components for a network of global communications satellite. The Cambridge, Ont.,-based company says it will supply C, Ku-band and Ka-band multiplexers, switches and microwave components for a number of satellites that will be part of the satellite network. Its shares were ahead 18 cents to $4.24.

European bourses were higher as London's FTSE 100 index rose 1.38 per cent, Frankfurt's DAX climbed 1.8 per cent and the Paris CAC 40 was up 2.02 per cent.

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