Markets are engaged in an impressive rally again today on investor optimism regarding the conflict in Afghanistan, the U.S. economy and corporate profits.

Earlier this morning, buyers flooded in as rumors spread that terrorist mastermind Osama bin Laden had been captured. The U.S. Pentagon quickly put that talk to rest, and stocks retreated from their highs.

At midday, the TSE 300 is hanging onto a 66 point gain to 7,018. Volume is strong at 96.2 million shares, with buyers beating sellers more than two to one. Winners outnumber losers 11 to six.

Today’s buying is broad-based, only golds are selling off. Miners are up better than 3%, paper stocks are up another 2%, techs have gained 3%. And everything else is more or less up, too.

The M&A action in the energy sector and the prospect of OPEC cutbacks remains a dominant story today. Canadian Hunter remains the top trader, although the price action is minor. Bigger gains are evident in names such as Pan Canadian Energy, Alberta Energy and Husky Energy. All of them are up nicely in heavy trading.

TD Bank is down about 2% on news of its buyback of TD Waterhouse. The fund companies are weak, too, but otherwise, the financials are looking stronger. TD Waterhouse has obviously zoomed higher, and Sun Life is leading the insurers up.

There’s strength in techs again too, led by the vanguard of Nortel Networks and Celestica. Names such as Exfo Electro, Descartes Systems, JDS Uniphase, C-Mac, Telesystem International Wireless, QLT and even 360networks, are rallying. Fording is powering higher again today too.

On the downside, Barrick is leading the golds south. And all the day’s big losers are gold stocks, including Goldcorp, Kinross Gold, Meridian Gold and Agnico Eagle. Also on the downside are recent rallyers Air Canada, Compton Petroleum, Rio Alto and Penn West.

In M&A news, a Canadian company is doing some buying for a change. Enbridge is purchasing natural gas assets in south Texas from a unit of Williams Companies Inc. for US$50 million.

Wi-LAN’s 51%-owned subsidiary, Digital Transmission Systems has entered into an agreement in which Somera Communications acquired certain assets for approximately US$6 million in cash, most of which will be used to pay secured creditors of the assets. It also assumed some liabilities in the deal.

Finally, Brookfield Properties has sold Bramalea City Centre to institutional investors. This transaction, together with the recent sale of Seven Oaks and West Oaks malls in Vancouver, generated approximately US$200 million in proceeds to Brookfield.

In New York the rally continues. are all the same. Improved investor sentiment is buoying the market. The Dow Jones industrial average is off its highs, but still up 146 points to 9,387. The Nasdaq composite has gained 52 ticks to 1,678. The S&P 500 is up 12 points to 1,093.

Somehow the small caps are shirking the rally today. The CDNX is down a point at midday to 2,856.

Volume is weak there, too, with just 9.9 million shares changing hands. Techs are up but miners are down and oils are flat. Maxim Power Corp is the top trader, gaining 10% to 67¢ on 657,500 shares.