A sharp drop in oil prices put Wall Street in a buying mood, but held back traders on Bay Street Tuesday.

At close, the S&P/TSX composite was up 24.95 points or 0.3% to 8369.37. The TSX Venture exchange was hurt by a drop in gold prices; it lost 21.97 points or 1.44 % at 1505.62.

The Dow Jones Industrial Average closed 80.96 points, or 0.79% higher to 10341.16 but off its 10363 intra-day high. The Nasdaq Composite Index gained 14.08 points or 0.76% to 1858.56, while the S&P 500 climbed 7.67 points or 0.69% percent to 1121.3.

The Canadian dollar surged Tuesday, fuelled by a combination of robust economic performance and the expectation of higher interest rates. It was up 0.74 of a cent at US77.67¢ in late trading. Economists cited the anticipation of a widely expected increase in interest rates by the Bank of Canada on Wednesday — it would be the first rate hike in 17 months — as well as strong economic data of late.

On the TSX, financial and technology issues led the way, with health care chipping in a solid boost. Financial stocks were up 0.58% in anticipation of Wednesday’s bank rate hike — all the bank issues were ahead. Tech stocks, up 1.85% as a group, were led by Research in Motion, which was up $2.92 or 3.6% to $83.96 late in the day, and by Cognos Inc., which had gained $1.81 or 4.47% to $42.27 in late trading.

Health care issues were ahead 2.99%, thanks largely to Biovail Corp., which gained $1.83 or 9.38% to $21.33, after it announced it had narrowed its range of expected revenue for 2004 while leaving its full-year profit forecast unchanged, reflecting better than expected sales of Wellbutrin XL and generic drugs but declines in other lines. The company now expects annual revenue of between US$820 million and US$920 million, while earnings per share, excluding one-time items, are forecast at US$1.35 to US$1.60 per diluted share, unchanged from the August update.

Gold stocks fell 2.48% as the price of the precious metal fell to its lowest level in three weeks due to an easing in security fears following the end of the U.S. Republican National Convention. Funds sold plays in gold that they had accumulated as a safety measure in case of an attack at the convention.

Energy stocks also held back the TSX, falling 0.42% after oil prices dropped on reports that there were adequate supplies of crude oil. This lessened fears that the world could face dwindling supplies due to the strife in the Middle East.

In New York, U.S. stocks closed at their highest levels in two months after the drop in oil prices eased investor concerns that high-energy costs would dampen consumer demand and hurt corporate profits.

Light crude for October delivery dropped 68¢ to settle at US$43.31 per barrel on the New York Mercantile Exchange.

There was also some bullish economic news from Japan and Germany, putting investors in a buying mood.

Japan on Monday released a quarterly survey showing capital spending by Japanese companies rose 10.7% from April to June from a year earlier, raising hopes that gross domestic product growth will be revised upward later in the week. Japan’s Nikkei Average has surged 2.5% over the past two sessions since the number was released. German industrial production, meanwhile, came in at 1.6% – double market forecasts.

Caterpillar was pacing the Dow advance with a 2.3% rise while Boeing, American Express, Hewlett-Packard, General Electric and SBC Communications also posted solid gains.