Markets continued their winning ways Monday, buoyed by some more bullish economic news in the U.S.

The Toronto Stock Exchange’s S&P/TSX composite index closed up 59.74 points or 0.68% at 8858.49 on volume of 268 million shares worth as declining issues led advancing issues. The TSX Venture exchange fell 17.39 points or 0.92% to 1878.03 as gold stocks took a hit.

The materials group lost 0.75%, weighed down by its gold component, which fell 2.04%, as bullion prices fell to two-week lows in the face of a strong U.S. dollar. Gold for current delivery closed at US$415.40 per troy ounce Monday on the New York Commodity Exchange, down from US$421.60 late Friday.

In New York, trading was light, as Wall Street started a shortened week when many traders take a vacation for Easter or Passover. U.S. (and Canadian) financial markets are closed on Friday. The Dow Jones industrial average was up 87.78 points or 0.84% to 10558.37. The Standard & Poor’s 500 Index was up 8.73 points or 0.76% to 1150.54. The technology-laced Nasdaq Composite Index was up 21.95 points or 1.07% to 2079.12.

The markets got some good news from a report that showed growth in the U.S. services sector hit a record high in March. The Institute for Supply Management’s non-manufacturing index surged to 65.8 in March from 60.8 in February, topping Wall Street forecasts for a rise to 61.5. That came on the heels of Friday’s stunning U.S. jobs report — the U.S labor market created nearly three times as many new jobs in March as expected.

But there was also some bad news, after the markets closed, from Bank of America Corp. It announced plans to cut 12,500 jobs as a result of its US$48 billion purchase of FleetBoston Financial Corp. Chief Executive Kenneth Lewis has targeted US$1.6 billion of cost savings from the merger. The cuts will take place over the next two years, and about 30% of them will come through attrition, the bank said.

Bay Street shrugged off heavy trading in Nortel Networks Corp., whose shares fell 33¢ or 3.99% to $7.94. More than 26.9 million shares traded on the TSX after the U.S Securities and Exchange Commission announced it has launched a formal probe of financial restatements at Nortel fueling concern about how deep accounting problems run at the telecoms equipment maker.

Most TSX subgroups finished higher, led by the health-care group, which rose 3.07%. The heavily traded financials group was up 1.53% as all five of the Big banks were up, led by Bank of Nova Scotia, which gained 63¢ to $36.57.

Investors Group Inc., which announced it wants to change its name to better reflect its two core business groups, fell 7¢ to $35.83. The Winnipeg-based company, which took over Mackenzie Financial Corp. in 2001, will ask shareholders at its annual meeting April 30 to approve the new name, IGM Financial Inc.

In the consumer staples sector, which was up 0.89%, Jean Coutu Group shares closed up 15¢ to $18.25 after hitting a new 52-week high of $18.30. Montreal-based pharmacy chain Jean Coutu agreed to buy 1,540 Eckerd drug stores from J.C. Penney Co. Inc. for US$2.4 billion.

The Canadian dollar was up 13¢ to US76.17¢.

Despite the upbeat economic news in the U.S., there was a note of caution thrown out Monday from economist Derek Holt of RBC Financial Group. Holt, noting the U.S. ISM non-manufacturing report Monday, which followed last week’s better-than-expected ISM manufacturing survey, said the “two reports taken together point to substantial signs of early inflationary pressures building within the U.S. economy. When combined with last Friday’s evidence of a sharp turnaround in labour market conditions, the case for monetary tightening is getting stronger day by day.”

There were no data releases for the Canadian economy Monday. Tuesday brings forward an update on building permits issued by Canadian municipalities for the month of February, and the Ivey purchasing managers’ index. Thursday is by far the most important day for updates on the status of the Canadian economy. The Labour Force Survey for March is due out, and will provide fresh data on employment growth, the unemployment rate, and the rate of growth in Canada’s labour force.

Also due out on Thursday are housing starts for the month of March. Expect Canadian markets to exhibit significant volatility this week in anticipation of these two important end-of-week releases especially given the changing monetary policy picture in the U.S.

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