Toronto stocks finished higher on Tuesday lifted by the U.S. Federal Reserve’s economic outlook and good news from market stalwart Nortel Networks. The S&P/TSX composite index rose 50.08 points to 7,625.37.

The Fed, as expected, decided to keep the key U.S. federal funds rate at 1% — a 45-year low.

In Toronto, the information technology sector jumped 4.27% as Nortel triggered a buying spree after it reached an agreement with Orange, the mobile telephone unit of France Telecom, to build part of its third-generation network. Nortel also benefited from news that it would spend $200 million over three years to strengthen its position in China.

Nortel shares jumped 47¢, or 8.27%, to $6.15 as more than 51 million shares changed hands.

Tundra Semiconductors climbed $1.15 to $15.75. Celestica gained $1.32 to $25.32.

Some 275 million shares worth $3.23 billion changed hands on the TSX. Market sentiment was positive as 644 issues improved and 552 declined.

The junior S&P/TSX Venture composite index shed 9.88 points to 1,368.52.

On Wall Street, stocks rallied on following the Fed decision.
The Dow Jones Industrial Average surged 118.53 points at 9567.34.

The tech-heavy Nasdaq composite index advanced 40.22 points to 1885.92. The broader S&P 500 rose 14.51 points to 1,029.32

The Canadian dollar closed lower after see-sawing during the day. The loonie rose early after a strong read on manufacturing data, but fell throughout the session as the U.S. greenback gained ground.

The dollar closed at US73.08¢, down slightly from US73.19¢ at Monday’s North American close.