Oil prices passed the US$56 mark Friday morning, powering Canadian markets, but dampening enthusiasm on Wall Street, already coping with renewed fears of inflation after a U.S. report on manufacturing indicated rising prices.

At midday, the Standard & Poor’s/TSX Composite Index added 34.68 or 0.36% to 9647.06 after climbing 128 points Thursday. The TSX Venture Exchange was 8.25 points or 0.44% ahead at 1894.71.

The Dow Jones industrial average was down 23.42 points or 0.22%, at 10480.34, after losing 37 points the previous session. The Standard & Poor’s 500 Index slipped 0.37 of a point or 0.03% at 1180.22. The Nasdaq Composite Index was down 4.91 points or 0.25% at 1,994.32.

The Canada’s dollar rose was up early in the session, but by midday had fallen back, trading at US81.31¢, down 0.36 of a cent from Thursday close.

On Bay Street, the TSX was lead by oil stocks, which were ahead 1.69%. The rise was fueled by another jump in oil prices as futures for May delivery rose $1.05 to US$56.45 on the New York Mercantile Exchange. Oil futures were reacting to a report issued by Goldman Sachs on Thursday that said oil prices could spike to US$105 a barrel.

Among the larger increases within the TSX energy group was producer EnCana Corp., which had climbed $2.02 or 2.36% to $87.45.

Gold stocks were down 0.26% as bullion prices dipped — they were down $2 to US$425.50 in late London trading.

Financial stocks lost 0.28%, lead by Bank of Nova Scotia, which was down 40¢ or 1.01% to $39.15.

Bombardier Inc. was among the most active stocks, losing 13¢ or 4.81% to $2.57 after it announced Thursday it is suspending its annual dividend as it tries to conserve cash.

In New York, stocks initially rallied on a report showing weaker-than-expected jobs growth, which was seen diminishing the likelihood that the Federal Reserve will raise interest rates at a more aggressive pace.

The Institute of Supply Management’s index of manufacturing activity for March was 55.2, up slightly from the Wall Street forecast of 55.0. The report’s manufacturing prices paid index climbed to 73.0 in March from 65.5 in February.

U.S. employers created only 110,000 new jobs in March, the smallest gain in eight months, the Labor Department said before the market open. The nonfarm payrolls number was barely half the 220,000 that Wall Street economists had forecast.

Overseas, Japan’s Nikkei stock average rose 0.47%. In afternoon trading, Britain’s FTSE 100 was up 0.75%, Germany’s DAX index gained 0.79%, and France’s CAC-40 climbed 0.49%.