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At midday: TSX edges higher as TD rallies on strong beat

Traders work on the floor of the New York Stock Exchange (NYSE) on Aug. 31.

Brendan McDermid/Reuters

Canada's main stock index rose on Thursday as Toronto Dominion Bank posted the strongest earnings beat among the country's top banks and quarterly data showed Canada's economic growth accelerated far more than expected.

TD Bank, Canada's second-biggest lender, was by far the biggest influence on the index. Its shares rallied 2.9 per cent to $66.57 after it reported earnings that topped expectations by a wider margin than its rivals in a quarter in which Canadian banks have outperformed market forecasts. TD's performance was bolstered by strong results from its North American retail businesses.

Canadian Western Bank was up 2.1 per cent to $29.28 following better-than-expected results.

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Robust consumer spending and energy exports during the second quarter fueled Canada's economy, which grew at its best pace in nearly six years. Gross domestic product grew at an annualized 4.5 per cent, far more than the 3.7 per cent economists had forecast, reinforcing expectations the Bank of Canada will raise interest rates in October.

At 11:12 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index rose 37.41 points, or 0.25 per cent, to 15,170.54.

Of the index's 10 main groups, six were in positive territory. The heftily weighted financials group gained 0.5 per cent.

Oil and gas stocks, which climbed 0.8 per cent, were helped by crude oil prices. Prices had suffered steep losses on demand concerns following record flooding from Hurricane Harvey in the United States that knocked out a quarter of the country's refining capacity.

Cenovus Energy rose 1.8 per cent to $9.60. Encana Corp rose 2.5 per cent to $11.67.

The materials group, home to resource firms, added 0.5 per cent as gold miners benefited from bullion prices that rose on a weaker U.S. dollar.

Goldcorp Inc gained 1 per cent to $17.05.

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Magna International Inc was another influential gainer, up 1.4 per cent to $59.64. The company says it is developing a new self-driving vehicle system.

A 0.6-per-cent decline in consumer staples stocks, however, and a 0.6-per-cent fall in telecoms tempered gains.

Wall Street was higher in late morning trading on Wednesday as upbeat data pointed to strength in the economy.

The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3 percent last month after a 0.2 percent gain in June.

The data comes a day after a report showed GDP grew at its fastest pace in more than two years in the second quarter.

"The outlook for the U.S. and the global economy, remains relatively positive and most investors do not see a recession ahead," said Michael Sheldon, chief investment officer of RDM Financial Group at HighTower.

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"Given that backdrop, equity markets are likely to grind higher over the next few quarters and pullbacks are likely to be bought by investors."

However, the core personal consumption expenditures (PCE) price index - the Fed's preferred inflation measure - increased 1.4 per cent in the 12 months through July, its smallest year-on-year increase since December 2015.

Core PCE has undershot the U.S. central bank's 2-per-cent target for the past five years and could diminish expectations of an interest rate increase in December.

Chances of a rate hike in December have fallen to about 36 per cent from 43 per cent a month ago, according to the CME Group's FedWatch tool.

"The fact that inflation remains below the Fed's 2-per-cent goal makes it tougher for (the Fed) to raise rates in the fourth quarter," added Mr. Sheldon.

Labor Department data showed the number of Americans filing for unemployment benefits rose slightly last week even as the labor market continues to strengthen.

The weekly data precedes the more comprehensive monthly jobs report on Friday, which will help investors gauge the strength of the labor market as they look for clues on the Fed's next move on rates.

Still, the S&P is on track to post a monthly loss for August, after four straight months of gains.

The Dow Jones Industrial Average was up 30.33 points, or 0.14 per cent, at 21,922.76, the S&P 500 was up 8.8 points, or 0.35 per cent, at 2,466.39.

The Nasdaq Composite was up 34.06 points, or 0.53 per cent, at 6,402.37.

Nine of the 11 major S&P sectors were higher, with the health index's 0.93 percent rise leading the advancers.

UnitedHealth's 0.7-per-cent gain provided the biggest boost to the Dow. The Nasdaq biotech index rose 1.4 per cent, helped by a rise in Gilead, Celgene and Biogen.

Among stocks, Dollar General fell 8 per cent after reporting a slide in second-quarter margins.

Campbell Soup was down 5.9 per cent after the company warned that sales for fiscal 2018 could fall. Rival General Mills was down 1.77 per cent.

Shoe Carnival surged 26 per cent after the footwear retailer's revenue and profit beat estimates.

Oil prices rose 1 per cent on Thursday, clawing back some of the losses made a day earlier, but U.S. crude is on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of U.S. refining capacity.

Prices also rallied in the oil products markets, with U.S. gasoline futures hitting a two-year high above $2 a gallon, buoyed by fears of a fuel shortage just days ahead of the Labor Day weekend that typically brings a surge in driving.

Hurricane Harvey, which brought record flooding to the U.S. oil heartland of Texas and killed at least 35 people, has paralyzed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.

The shutdowns also led the U.S. government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana.

U.S. West Texas Intermediate (WTI) crude futures were set to close the month down 7 per cent, their steepest monthly loss since July 2016. They were trading 1.4 per cent up at $46.58 a barrel.

"The current steep recovery follows yesterday's steep drop. The sell-off was bigger than expected and we see some bargain hunting now," said Hans van Cleef, senior energy economist at ABN Amro.

International benchmark Brent crude was up 58 cents, or 1.1 per cent, at $51.44 a barrel. It had fallen more than 2 percent in the previous session.

Analysts at Goldman Sachs and Stifel said they expected U.S. infrastructure outages to last several months but said it was difficult to estimate the exact damage.

Others saw potential for operational refinieries to delay typical September seasonal maintenance to benefit from high prices.

"Refineries outside the affected area may delay maintenance to benefit from high processing margins," said Commerzbank oil analyst Carsten Fritsch.

"Hence, the negative impact on crude oil demand and oil product supply might be less severe than feared."

U.S. crude and product stocks, typically watched closely by oil investors because they reflect market balancing, were largely ignored this week.

U.S. commercial crude stocks fell by 5.39 million barrels last week to 457.77 million barrels, the U.S. Energy Information Administration said on Wednesday.

That's down 14.5 percent from record levels reached in March.

At the same time, the amount of crude entered into refineries reached a record high of 17.73 million bpd, the data showed. The number is expected to have dropped dramatically this week because of infrastructure closures.

Analysts at JBC Energy said that figure could slip to as low as 15-16 million bpd.

Others said the refinery closures would lead to a rise in crude inventories.

"We could see rising U.S. crude inventories in the next couple of weeks until demand from refineries recovers. But by the end of September I expect the situation to be almost back to normal," said Frank Schallenberger, head of commodity research at LBBW.

The trend for shrinking oil stocks and expectations for a rise in global oil demand growth meant analysts polled on a monthly basis by Reuters raised their oil price forecasts for the first time in six months.

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