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At the open: TSX rises as higher commodity prices boost resource shares

A Toronto Stock Exchange (TSX) logo is seen in Toronto in this file photo.

© Mark Blinch / Reuters

Canada's main stock index rallied on Friday, led by energy and mining shares, as prices of oil and gold rose.

The Toronto Stock Exchange's S&P/TSX composite index was up 54.09 points, or 0.34 percent, at 15,796.29, shortly after the open. Nine of the index's 10 main groups advanced.

The Canadian dollar was little changed against its U.S. counterpart on Friday, clawing back earlier losses as oil prices rose and as data showing weaker-than-expected U.S. underlying inflation weighed on the greenback.

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The U.S. dollar retreated against a basket of major currencies after a modest reading in the core CPI, which is likely to worry Federal Reserve officials who have been engaged in a vigorous debate on the inflation path.

In contrast, the Bank of Canada pulled the trigger with two rate increases since July, trusting its projections and betting that stronger growth will help push inflation to its target by the middle of next year.

Prices of oil, one of Canada's major exports, were boosted by strong Chinese oil imports and turmoil in the Middle East.

U.S. crude prices were up 1.60 percent at $51.41 a barrel.

At 9:25 a.m. ET , the Canadian dollar was little changed at $1.2470 to the greenback, or 80.19 U.S. cents.

The currency traded in a range of $1.2450 to $1.2512.

The S&P and Nasdaq hit record highs at the open on Friday after data showed retail sales surged the most in 2-1/2 years in September, easing doubts over an economy that has been sluggish this year.

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The Dow Jones Industrial Average rose 39.46 points, or 0.17 per cent, to 22,880.47. The S&P 500 gained 4.32 points, or 0.16 per cent, to 2,555.25. The Nasdaq Composite added 20.57 points, or 0.31 per cent, to 6,612.08.

All of Wall Street's main indexes had ended lower on Thursday as investors worried about credit card lending losses in the third quarter at JPMorgan and Citigroup and what that suggested about underlying consumer demand.

Data on Friday also showed consumer prices recorded their biggest increase in eight months in September as gasoline prices soared in the wake of hurricane-related production disruptions.

But year-on-year core inflation was unmoved for the fifth month, putting no new pressure on the Federal Reserve to tighten borrowing costs and hamper demand any further.

"The expectations (for earnings) were fairly strong coming into the quarter, and the markets have been very strong," said Thomas Martin, senior portfolio manager at GlobAlt Investments in Atlanta, Georgia.

"The market hasn't had a correction in a long time and valuations are undeniably high, that's got people on edge. People are just waiting to see what other people are going to do, and they just don't want to be the last person out of the door if there is a correction."

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Third-quarter earnings season kicked off on Thursday with tepid reactions to earnings from JPMorgan and Citigroup after both lenders said they had set aside more money for credit card lending losses in the third quarter, even as they reported results that topped analyst estimates.

With the S&P 500 up about 14 per cent so far in 2017, investors are hoping earnings growth can help justify valuations.

The retail sales numbers were boosted by demand for building materials and motor vehicles in the aftermath of the hurricanes.

World stocks advanced for a fourth straight day on Friday on expectations of broad-based global growth, while the dollar was on course for its worst week in five as investors awaited U.S. inflation data.

MSCI's world equity index, which tracks shares in 47 countries, was up 0.1 per cent after hitting record highs on Thursday.

Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan hit a 10-year high.

European shares rose to their highest level in nearly four months, helped by some well-received earnings updates. The pan-European STOXX600 rose 0.3 per cent and was set for its fifth straight week of gains as were world stocks.

Germany's DAX index was up 0.1 per cent, just below an all-time high hit in the previous session, while Britain's FTSE eased back 0.1 per cent after a record close on Thursday.

"We're seeing positive economic news even in the midst of so called geopolitical risk, I think investors are generally more optimistic right now," said Craig Erlam, senior market analyst at OANDA, referring to strong corporate earnings.

"Earnings in the second quarter were very positive, and looking beyond the impact of hurricanes, it seems like there's improved fundamentals in the U.S. and Europe."

Emerging market stocks were buoyant too as another 0.2-per-cent rise set their latest 6-year peak.

In currencies, the dollar stayed on the defensive after minutes from the last U.S. Federal Reserve meeting showed policymakers remained divided on U.S. inflation prospects.

The index which measures the greenback against a basket of six major currencies was flat ahead of consumer price inflation data, due at 1230 GMT.

"Abating political risks in the U.S. and growing Fed rate hike bets have pushed the dollar higher in recent weeks," Credit Agricole strategists said in a note.

"With a December rate hike almost fully priced in by now, however, investors are starting to focus on the Fed's still cautious forward guidance and hence the limited scope for a further increase of the dollar's rate advantage."

On top of the near-term inflation readings, investors are looking at whom U.S. President Donald Trump will nominate as successor to Fed Chair Janet Yellen, whose term expires next February.

White House Chief of Staff John Kelly said on Thursday that Mr. Trump was "some time away" from making a decision, while another official said Mr. Trump had met with Stanford University economist John Taylor -- of economics text book Taylor-rule fame -- to discuss the job.

Meanwhile, the euro was flat but still set for its biggest weekly rise in a month.

European Central Bank policymakers broadly agreed to extend asset purchases at a lower volume at their October policy meeting with views converging on a nine-month extension, sources at the central bank told Reuters.

Britain's pound rose to a 10-day high, boosted by a report in Germany's Handelsblatt newspaper that the European Union could offer Britain a two-year transitional Brexit deal.

The most eye-catching move, however, was from digital currency Bitcoin as it soared by as much as 7.4 percent after Thursday's 13 percent gain, to hit a record high of $5,846 . It is up more than 450 percent this year.

The chief financial officer of JPMorgan Chase & Co said the firm was open-minded about the future potential use of digital currencies, appearing to dial back comments last month from his boss, Chief Executive Officer Jamie Dimon, who said bitcoin was a "fraud".

Among commodities, copper prices held firm after hitting a one-month high on Thursday as optimism over the demand outlook from major consumer China fuelled buying.

London copper futures were at $6,898.50 a tonne, up 0.2 per cent on the day.

Oil prices also climbed after data showed both U.S. crude production and inventories had declined. Crude was set for its sixth weekly rise in the last seven weeks. U.S. crude jumped 2 per cent to $51.59 a barrel. Brent crude rose 2.2 per cent to $57.50 a barrel.

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