Canadian stocks are rallying hard Thursday, as traders key on positive corporate news, and ignore negative economic data. The S&P/TSX composite index has jumped 69 points so far to 8,706.

Canadian retail sales sharply disappointed economists, dropping 1.2% in December, and throwing fourth quarter GDP forecasts into doubt. However, some traders see this as a signal of interest rate cuts by the Bank of Canada beyond next Tuesday’s expected reduction, boosting the outlook for stocks generally.

Today’s other data was less market-moving. Canada’s current account slipped, as expected. U.S. durable goods orders were much weaker than anticipated, and jobless claims rose yet again. However, Canadian traders appear to be taking this in stride, expecting that the recovery will continue nonetheless.

Toronto volume is quite light, with just 122.6 million shares traded, a factor which always throws doubt on the conviction behind a big move one way or the other. The buying volume is convincingly ahead of the selling by a 23:14 margin. Market breadth is also solidly bullish, as winners outnumber losers by a six to five edge.

The banks are powering the way higher today, as strong earnings reports boosts the financial sector by more than 1.2% today. Energy stocks remain very strong today, too, and there is more moderate buying in techs, health care stocks and consumer names.

Industrials and real estate are weaker, however.

The banks are at the centre of the action today, with TD Bank jumping almost 3% in heavy volume, on news that first quarter net income was $603 million, compared with $347 million for the same quarter last year.

Similarly, CIBC has jumped more than 3%, albeit in lighter volume, on news that its net income for the first quarter was $609 million, compared with $510 million for the previous quarter and net income of $445 million for the same period a year ago. It also reported that its first quarter includes a reserve of $50 million relating to matters involving its involvement with the U.S. mutual fund trading scandal.

National Bank is up more than 2% on news that it earned record net income of $186 million in the quarter, compared with $166 million in the corresponding quarter of 2003.

Elsewhere in the group, Manulife is up 1.1%, Royal Bank has gained 1.2%, Scotia and Bank of Montreal are seeing smaller gains too.

Strong earnings news is also boosting energy giant, EnCana. It has gained 2.4% today, in strong trading, on news that it earned $2.4 billion in 2003, up 183% from pro forma 2002. The company also affirmed its10% organic sales growth target for the coming year.

The EnCana news is also sparking buying in Talisman Energy, Petro Canada, Canadian Natural Resources, Canadian Superior Energy and Storm Energy.

Nortel is powering the techs higher again today, up another 1.8% in decent volume. Mitec Telecom and Telesystem International Wireless are seeing some bargain hunting action too.

There is also strength in Jaguar Nickel, Canfor, Aur Resources, Aecon, International Uranium and Garda World Security.

On the downside, Royal Group Technologies is taking a thumping. It is down 22% in heavy trading on news that police and regulators are investigating the firm’s affairs.

The other big loser is BPO Properties, which is down 29%, although there is no news from the firm.

The other names on the downside are a mix of profit taking trades and other negative news. Alcan has slipped a bit, as has Barrick and BCE. Sino-Forest is down, along with Cambior, Inmet Mining and Tahera. Rona is giving back some of its recent gains. And, Tundra Semi is slumping on news that several big global chipmakers could face price-fixing charges in the U.S.

In other earnings news, CryoCath Technologies has dropped 3.2% on news that it lost $5 million in the first quarter.

SR Telecom said that its loss more than doubled to $44.75 million in 2003. Ritchie Bros Auctioneers saw earnings of US$36.6 million in 2003. Mega Bloks saw its earnings build to US$28.8 million in the year. And, CryptoLogic earned US$9.4 million for 2003.

In M&A news, BCE Emergis has reached an agreement to sell all of the shares of its care-management subsidiary National Health Services for US$10 million to SHPS Holdings Inc.

Cara Operations has completed its transaction to go private.

Falconbridge reports that its settlement offer to office, clerical and technical employees was rejected by 95% of members of the United Steelworkers of America Local 2020.