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At midday: TSX recovers as Trump promise of flexibility eases tariff fears

The TSX logo is seen in Toronto in this file photo.

© Mark Blinch / Reuters

Canada's main stock index advanced on Thursday, with all sectors but one in positive territory, on receding fears of a trade war with the United States after President Donald Trump promised flexibility in dealing with the country's "real friends."

A White House official said on Wednesday night that Trump planned to offer Canada and Mexico – fellow signatories of the North American Free Trade Agreement (NAFTA) – the possibility of a 30-day exemption from the tariffs.

In a tweet on Thursday, Trump said he would show "great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military."

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At midday, the Toronto Stock Exchange's S&P/TSX composite index was up 37.40 points, or 0.24 per cent, at 15,510.01.

Shares of trade-sensitive auto parts and railroad companies recovered but some wavered. Magna International Inc. slipped 0.25 per cent to $67.49 and Canadian National Railway Co. was up 0.4 per cent at $94.47.

Machine manufacturer Linamar Corp. and Packing tape-maker Intertape Polymar Group were the biggest gainers on the index, rising 7.2 and 6.6 per cent respectively, after reporting fourth-quarter profits that beat expectations.

The tech sector was up 1.7 per cent, with BlackBerry up 4.6 per cent, and the healthcare group rose 1 per cent with Canopy Growth up 1.5 per cent.

Cominar REIT fell 5 per cent after reporting a drop in its quarterly operating revenue.

Mining companies Ivanhoe Mines, Franco-Nevada Corp and Paramount Resources were also among the biggest decliners, hit by a retreat in metal prices.

Copper futures pulled back 1.85 per cent, while gold futures slipped 0.5 per cent.

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The TSX base metals group was off 3 per cent, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 1 per cent.

U.S. crude oil futures fell 1.3 per cent to US$60.34 a barrel.

Cominar was the most actively traded stock on the index, followed by marijuana producers Canopy Growth and Aphria Inc.

U.S. stocks rose on Thursday as fears of a global trade war eased.

Worries over the likelihood of a global trade war triggered by Mr. Trump's tariff plans have dominated markets since last Thursday, with chief economic adviser Gary Cohn's exit heightening such concerns.

But a White House spokeswoman's announcement that Mr. Trump's tariffs plan may include "potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well" helped the U.S. markets recover on Wednesday.

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"Anything that would suggest a little bit of a roll back from the tariffs is viewed as positive," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

Mr. Trump had been expected to sign a proclamation imposing 25 per cent tariffs on steel imports and 10 per cent on aluminum later in the day, but this could slide into Friday.

The plan has faced with strong opposition from most of key partners, with Europe and China warning they would respond in the event of a trade war with the United States.

The Dow Jones Industrial Average rose 9.09 points or 0.04 per cent to 24,810.45. The S&P 500 gained 2.81 points or 0.01 per cent to 2,729.61 and the Nasdaq Composite jumped 20.62 points or 0.28 per cent to 7,417.27.

Express Scripts was among the top boosts to the S&P 500, rising 10.3 per cent after health insurer Cigna agreed to buy the pharmacy benefits manager for $54-billion deal. Cigna shares slipped 10.3 per cent.

The deal boosted the S&P healthcare index, up 0.29 per cent. But the top gainers were industrials and technology stocks.

Kroger fell 12.1 per cent after the supermarket chain issued a disappointing full-year profit forecast.

American Eagle Outfitters turned nearly 10 per cent lower after trading up premarket.

A Labor Department report showed initial jobless claims rebounded from a more than 48-year low last week, but the trend continued to point to robust labor market conditions.

A comprehensive reading on jobs and wage is expected on Friday. The average hourly earnings is expected to slow to 2.8 per cent in February on an annualized basis, from 2.9 per cent in January.

Investors are worried that higher wages could lead to faster interest rate increases by the Federal Reserve and make borrowing expensive for companies.


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