Markets are making solid gains following some better than expected economic news in the U.S., including a stronger second quarter GDP report, lower jobless claims and a robust Chicago purchasing managers index. At midday, the S&P/TSX index is up 29 points to 7,234.

Volume is on the light side at 95.6 million shares, with the buying swamping the selling by a 63:23 margin. Market breadth is narrower, but still bullish, as winners outnumber losers seven to six.

Most sectors are making gains following the improved economic data. Techs are strongest, up 2%. There are also solid gains in health care, materials, industrials and diversifieds. Utilities and financials are ticking down.

Nortel is leading the tech group higher as usual, driven by U.S. optimism. It is up 3% on volume of more than 10.6 million shares. Research in Motion and Zarlink Semi are up, too.

Other speculative spaces are also seeing strong rallies, with Biovail leading the biotechs higher. It is up about 5.7%. There are also gains in Telus, Creo and Cinram International. But, Westport Innovations, CGI Group and Bell Nordiq Income Fund are all down.

Old economy stocks are also enjoying the signs of solid U.S. growth. Inco is up 0.4% on solid volume of 1.5 million shares. EnCana is powering the energy group higher, up 0.7%; Barrick is up 1.3%, leading the golds; and, there are gains in Stelco, Crystallex, Aur Resources, Aber Diamond and Gerdau AmeriSteel Corp.

The financials are split. Manulife is up 0.6%, but, Scotiabank is down 0.3%, weighing on the sector. Power Corp is 1.5% lower, too.

The other notable losers are largely driven by stock-specific news. Royal Group Tech is down 5.7% for example, on news that it had a third quarter loss of $1.64 million on inventory writedowns.

Paper firms such as Canfor and Cascades are sliding on reports that talks to resolve the softwood lumber dispute with the U.S. have broken off.

In earnings news, Thomson Corp reported that it earned $116 million in the second quarter of 2003. It said that acquisitions drove growth, but future expectations are dimmed. It has not lowered its growth targets though.

Pengrowth Energy Trust saw its second quarter earnings come in at $52.5 million.

And, insurance brokerage consolidator, Hub International Ltd, reported that it earned US$10.1 million in the second quarter.

Inex Pharmaceuticals lost $11 million in the second quarter.

In New York, stocks opened higher on the GDP news, pulled back a bit, but then roared ahead again after the Chicago PMI seemed to confirm the recovery story.

The Dow Jones industrial average is up 135 points at midday to 9,335. The Nasdaq composite index has gained 30 points to 1,751.

The S&P/TSX Venture index is also celebrating the U.S. data, romping to a 17 point gain to 1211. Volume is average at 16.6 million shares, led by Las Vegas From Home.com, which is up a penny to 5¢ on 711,000 shares.