Stocks are making modest gains in busy trading Thursday. At midday, the S&P/TSX composite index has gained 36 points to 6,762.

Volume is strong at 137.7 million shares, with the buying doubling up on the selling. Market breadth is decidedly positive, too, with winners outnumbering losers 21:16.

Stocks got a boost from surprisingly data on consumer inflation released by Statistics Canada. The consumer inflation reading for April came in much lower than expected, causing economists to predict that the current string of interest rate hikes by the Bank of Canada may be halted.

This has sparked a bit of selling in financials, and golds. Every other sector is up. There are notable gains in the techs, up 2.3%, and diversifieds, telecoms and consumer names.

Nortel is leading the tech group higher once again, it is up 3.3% on decent volume of 10.7 million shares. It is joined by strength in Celestica, Zarlink Semi and CAE.

The top trader on the day is Methanex, which is up 0.5% on 4.4 million shares, as traders react to the news that Nova Chemicals is selling its 37.2% stake in the firm. Methanex will be buying back nine million of the shares on offer. Nova is down 1.7% on the day.

Financials are trading actively today, led by TD Bank, which is down 2.4% on strong volume, after reporting its latest quarterly results. Following TD, Royal Bank is down 0.7%, but Scotia is up a little.

There is also buying in a host of old economy names including BCE, EnCana, Canadian Natural Resources, FNX Mining, Westaim and Ketch Resources. Rothmans shareholders continue to celebrate yesterday’s big tobacco suit ruling, it is up another 3.3% on the day.

Bombardier is leading the way on the downside, off 2.7% on heavy volume of 5.6 million shares.

There is also weakness in Air Canada, Intrawest, Domtar, Iamgold and Kinross Gold.

In earnings news, Oncolytics Biotech says that it incurred a net loss for the first quarter of $1,114,314, compared with a net loss of $1,273,820 for the first quarter of 2002.

ATS recorded net earnings for the fiscal year 2003 of $2.3 million, despite market weakness, and a non-cash charge of $6.0 million in the fourth quarter reflecting impairment in the value of certain assets.

And, Taiga Forest Products said its earnings for the year were $7.8 million, compared to $6.2 million in the year prior.

Finally, Weyerhaeuser said that three of its softwood lumber sawmills in Canada and one in western Washington will take periods of downtime due to poor market conditions.

In New York, stocks are also enjoying a solid rally as traders get news of an impending tax cut in the U.S. The Dow Jones industrial average has added 59 points to sit at 8,576. The S&P 500 is six points higher at 929. The Nasdaq composite index is 15 points to the good at 1,505.

The small caps aren’t doing much of anything today, the S&P/TSX Venture index is up less than a point at 1,079. Volume is also decent there at 17.3 million shares. Hathor Exploration is the day’s top trader, down 11% to 33¢ on 1.9 million shares.