Stocks in Toronto retreated from early-morning highs, but managed to close the day on a positive note.

Reports that the U.S.-led invasion force had reached central Baghdad increased hopes that the hostilities in Iraq will be over soon. U.S. military officials are more cautious than investors, though, saying the drive into the Iraqi capital is more of a show of force than the definitive closing-game that investors seem eager to see.

The Toronto Stock Exchange’s S&P/TSX composite index finished up 39.35 points, or 0.62%, at 6,434.33, after losing early gains. At one point early in the day the composite was up 97 points.

Eight of the 10 TSX subgroups ended higher, with the biggest upward push provided by a 0.94% rise in the heavily weighted financial services sector. Sun Life Financial Services led the way up. It gained 50¢, rising to $29.10. Scotiabank rose 70¢ to $52.75.

The story south of the border was similar as stocks wrung out gains. The Dow Jones industrial average, which was up as much as 243 points, fell due to profit-taking and the realization that the U.S. economy is weak and the fact the war and post-war reconstruction will contribute little to improve the situation.

There was some early exuberance. It even focused on airline shares, based on the idea that the beleaguered airline and travel industry might recover some of the losses projected due to the war.

The Dow finished the day up 23.26 points, or 0.28%, to 8300.41, a significant drop from the session high of 8,520.21. The Standard & Poor’s 500 added a mere1.08 point, or 0.12%, to 879.93 — a far cry from its intra-day high of 904.89. The Nasdaq composite index added just six points, or 0.43%, at 1,389.51, based on the latest figures, after giving up an early gain of more than 3%.