Investors may have had one eye on the Bank of Canada, but their main focus on Monday was on mining and energy issues. That sector helped push stocks on Bay Street to a three-year high.

The Toronto Stock Exchange S&P/TSX composite index rose 86.18 points, or 0.98%, to 8874.67 as the resource-heavy index took advantage of higher prices and supply concerns. Volume was 265.1 million shares. The TSX venture exchange was up almost 20 points or 1.06% to 1909.3 on 96 million shares traded.

In New York, meanwhile, the Dow Jones industrial average rose 94.22 points, up 0.89% to 10,678.14, while the Nasdaq Stock Market composite index rose 27.98 points or 1.38% to 2,057.80. The broadly based S&P 500 rose 11.02 points or 0.96% to 1,155.96.

Wall Street was fueled by new manufacturing data that suggested a turnaround in hiring is on the horizon and boosted expectations for Friday’s crucial jobs report for February. The monthly manufacturing index from the Institute for Supply Management showed that manufacturers are gaining enough confidence to hire workers. The employment index part of the survey rose to 56.3 in February — the highest since December 1987 — from 52.9 in January.

Investors are hoping the bullish ISM employment data bodes well for February’s snapshot of the U.S. labor market on Friday. The U.S. economy has been strengthening, but the sluggish job market has remained a sore spot in the recovery.

Canadian investors are also expecting good news on Tuesday from the Bank of Canada, which is widely expected to lower interest rates by a quarter point. That will mean Canadians will likely pay less for their mortgages, car loans and other consumer credit. If, as most economists are predicting, the Canadian central bank knocks its key rate down to 2.25%, it will be the second time this year the bank has lowered rates to boost a Canadian economy that has been sluggish for several months, but is beginning to turn around.

In the meantime, Toronto markets can thank foreign investors who have been spending heavily on Canadian base metals. The energy sector raced ahead 3% to lead all groups, while materials stocks followed closely with a 2.5% gain. Eight of the 10 TSX subindices finished higher. Energy shares remained in strong demand as low U.S. inventories helped send oil prices hit post-Iraq war highs.
Nexen Inc. jumped $2.15 to $52.10 while Talisman Energy pocketed $2.67 to close at $80.72. A surge in copper prices helped carry metals and mining shares higher amid strong demand from China’s booming economy. Inco Ltd. rose $2.39 to $51.91, while Falconbridge Ltd. closed $1.01 to $37.01.
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The euro rose slightly to US$1.2464 from Friday’s close of US$1.2432 on concerns the Bank of England and the European Central Bank will cut rates when they meet on Thursday. The Canadian dollar fell 0.20¢ to US74.67¢.