Consumer spending helped the Canadian economy avoid a recession in the second quarter.

Real gross domestic product (GDP) edged up 0.1% in the second quarter of 2008, following a 0.2% decline in the first quarter, Statistics Canada said today.

Final domestic demand continued to outpace GDP, growing 0.5% in the quarter. Real GDP advanced 0.1% in June, StatsCan said.

Separately, the statistical agency reported that the price indexes for manufactured goods and raw materials registered lower monthly growth in July than in the previous four months, increasing 0.4% and 1.4% respectively, primarily as a result of the slowdown in the rise of petroleum prices.

The Canadian dollar opened at US95.15¢, up .08 from Thursday’s close.

In market news, U.S. stocks appeared headed toward a lower opening Friday as investors awaited reports on consumer spending and incomes

Oil prices rose on expectations Tropical Storm Gustav will soon enter the Gulf of Mexico area, home to a quarter of U.S. crude supplies and 40% of its refining capacity.

Light, sweet crude oil rose a moderate US$1.06 to US$116.65 in premarket trading on the New York Mercantile Exchange.

Overseas, Japan unveiled a stimulus package with the equivalent of US$18 billion in fresh spending to shore up its flagging economy on Friday as figures showed that inflation has spiked to its highest in nearly 11 years, denting consumer spending.

In Tokyo, the Nikkei index rose 2.39%.

European Commission said Friday that inflation in the euro zone dropped to 3.8% in August, down from a record high of four% in June and July when prices for fuel and food rose sharply from a year ago

However, economic confidence in the euro zone fell again in August to 88.8 with industry, the construction sector and retailers more worried than they were last month.

In afternoon trading, London’s FTSE-100 index was up 0.25%, the CAC-40 index in Paris was up 0.52% and Frankfurt’s DAX was down 0.11%.

The benchmark index of the Toronto Stock posted a triple-digit gain on Thursday as the banking shares powered ahead.

The S&P/TSX composite index closed up 219.83 points, or 1.62%, at 13,750.48.

The financials sector rallied 4.2% as major banks climbed after releasing results that were not as bad as some analysts feared.

The junior S&P/TSX Venture composite index added 13.93 points, or 0.71%, to close at 1,963.85.

In New York, U.S. stocks rose sharply on Thursday as the government reported the economy grew at a faster-than-expected pace in the second quarter.

The Dow Jones industrial average closed up 212.67 points, or 1.85%, at 11,715.18. The S&P 500 closed up 19.02 points, or 1.48%, at 1,300.68. The Nasdaq composite index ended up 29.18 points, or 1.22%, at 2,411.64.