The Canadian Press

Commodity stocks led the Toronto stock market to a solid gain Monday as a lower U.S. dollar and hopes for higher demand sent oil and metal prices up sharply.

The S&P/TSX composite index moved 72.35 points higher to 12,029.72, while the TSX Venture Exchange was ahead 12.45 points at 1,572.23.

Reports showing an improvement in business and consumer confidence in Europe raised hopes for higher commodity demand. Investors were also relieved at data showing further signs of economic recovery as consumer spending in the U.S. rose for a fifth straight month.

The base metals sector was up 2.55% as May copper rose 13 cents to US$3.54 a pound, with inventories sliding to their lowest levels since early January. On the TSX, Teck Resources (TSX:TCK.B) gained $1.72 to C$43.19 while Equinox Minerals (TSX:EQN) rose 24 cents to C$3.79.

Other commodity prices strengthened in the face of a lower U.S. dollar, with as the May crude contract on the New York Mercantile Exchange rising $2.17 to US$82.17 a barrel.

Analysts also suggested that the sharp rise in crude was due in part to the terrorist bombings in Moscow. Russia is a major oil producer and there were worries that there could be more attacks that might crimp production.

The energy sector advanced 1.89% as Suncor Energy (TSX:SU) climbed $1.10 to C$31.95 and Canadian Natural Resources (TSX:CNQ) improved $1.56 to C$73.45.

The April bullion contract on the Nymex was ahead $6 to US$1,110.30 an ounce, taking the gold sector higher. Kinross Gold Inc. (TSX:K) rose 22 cents to C$17.69.

The financial sector was the only losing group, down 0.24% as Manulife Financial (TSX:MFC) shed 21 cents to $20.08.

Three of Canada’s biggest banks — Royal Bank (TSX:RY), TD Bank (TSX:TD) and Laurentian Bank (TSX:LB) said they were raising some of their mortgage rates, effective Tuesday. The biggest increase affects five-year mortgages — the banks are hiking their posted rate by six-tenths of a per cent to 5.85%. Royal shares declined 37 cents to $59.45, TD shares slipped 43 cents to $75.57 and Laurentian declined 32 cents at $43.80.

The weaker greenback and the sharp surge in commodity prices helped push the Canadian dollar up 0.57 of a cent to 97.97 cents US.

The TSX moved higher Monday following a flat showing last week which had left the Toronto market ahead under 2% for the first quarter, a performance that was not surprising to many analysts.

“We saw strong gains last year (so) it’s not too surprising to me that we’re going to see a much more moderate market and it’s going to be more volatile on the way as investors try to assess the second phase of the rebound,” said Kate Warne, Canadian markets specialist with Edward Jones in St. Louis.

“The first phase was strong but the second really depends on how strong economic growth is. While we’re seeing a pretty strong economy in Canada, the rest of the world is putting forward a more mixed picture, certainly a recovery but not a strong recovery.”

Meanwhile, a new report from CIBC World Markets says that a hike in the Bank of Canada rate this summer should not derail the stock market. The report says stocks have historically outperformed bonds, which are extremely sensitive to interest rates, in the early months in the 13 interest rate tightening cycles studied by the investment firm.

CIBC chief economist Avery Shenfeld said hikes in interest rates tend to be more damaging later in the cycle, when the central bank is more willing to risk stalling the economy.

New York markets advanced amid data which showed that American consumers boosted their spending by 0.3% in February, a bit slower than the 0.4% increase in January. Still, the increase was considered a respectable showing, especially given the snowstorms that slammed the U.S. East Coast.

The income of Americans, however, remained flat. That followed a solid 0.3% gain in January and suggested consumers will stay cautious in the months ahead, making for a modest recovery.

The Dow Jones industrial average advanced 45.5 points to 10,895.86. The Nasdaq composite index gained 9.23 points to 2,404.36 while the S&P 500 index was up 6.63 points at 1,173.22.

An agreement last week to arrange a eurozone aid package to Greece also appeared to improve sentiment.

The aid plan for Greece entails bilateral loans from other eurozone countries — as well as help from the International Monetary Fund — but only as a last resort if Greece is unable to raise money on markets.

@page_break@Also on Monday, Greece raised euro5 billion (US$6.74 billion) with a seven-year bond issue in a crucial first borrowing test. But the government’s borrowing costs remain higher than it wants. The bonds were sold at a coupon yield of 5.9%, which is about twice the cost Germany faces.

The high yield comes before April and May deadlines to refinance about euro20 billion in debt, with total Greek borrowing needs at euro54 billion (US$72 billion) this year.

In corporate news, Independent Chinese automaker Zhejiang Geely Holding Group signed a binding deal Sunday to buy Ford Motor Co.’s Volvo Cars unit for US$1.8 billion.

Ford, which bought Volvo Cars from AB Volvo in 1999 for US$6.45 billion. Ford shares declined 29 cents to US$13.57.

Shares in women’s clothier Reitmans (Canada) Ltd. (TSX:RET) rose 25 cents to $15 after it said that its profits were 56.9% higher in the fourth quarter compared with the year earlier, when its results were partly weighed down by a tax-related item.

Domtar Corp. (TSX:UFS) has agreed to sell its forest products business for $80 million plus additional working capital to EACOM Timber Corp. (TSXV:ETR). The Domtar forestry products division includes five operating sawmills in various regions. Domtar shares gained 66 cents to $66.14 while EACOM shares were ahead 14 cents at 97 cents.

Petrominerales Ltd. (TSX:PMG) shares ran up $2.58 to $34.10 after it reported that initial production at the Candelilla-3 well in Colombia is a prolific 15,600 barrels of oil per day. That boosts total production at the Candelilla structure to 38,700 barrels per day and the company’s total production above 53,000 barrels per day. Shares earlier hit a 52-week high of $35.