Stronger than expected economic data on both sides of the border and decent corporate news has stocks up at midday. The S&P/TSX index has gained 56 points to 7637. Volume is strong at 113.4 million shares, with selling volume holding a tiny edge on the buying. Market breadth is positive however, with winners edging losers.

Today’s rally is very broad-based, every sector is up except golds. Telecoms are leading the way higher, a trend that started in Europe this morning. The sector is up almost 4% at midday. Techs are notably stronger, as are health care stocks, and all of this is supportive for financials.

BCE is leading the rally today, up more than 5% in heavy trading, as investors start to believe in it again. Telus is benefiting too, up almost 9%.

The exception is Call-Net, which is down 64% to just $1.13. The firm withdrew its financial forecasts, blaming the recent CRTC decision to cap phone rates for foiling its plans.

Nevertheless, the generally positive action in the telecom space is boosting banks that have recently been burned for their telecom exposure. Royal Bank is up 1.5%. Bank of Montreal has added 1.0%.

Other gainers come from diverse backgrounds, with names such as Domtar, Tembec, Teck, EnCana, Torstar, Ballard Power, Weston, Aber Diamond, Precision Drilling and Transforce. Market sentiment is broadly stronger after GDP and current account numbers handily beat expectations, and U.S. data appeared supportive too.

The losers in all of this are the golds, which have seen lots of safe haven buying recently. These stocks are down, despite further gains in the price of gold today, as investors rotate into other groups. Placer Dome is down 1.3%, Barrick has dropped 1.8%. Echo Bay Mines, Kinross, Bema Gold and Eldorado Gold, are all down too.

Other losers include recent winners such as GTC Transcontinental (owner of Investment Executive), Major Drilling, Canadian 88, and Research in Motion.

In earnings news, Forbes Medi-Tech says that it is pleased to report a further reduction in net losses, with the net loss for the first quarter of fiscal 2002 of $2.1 million, down from $3.0 million in 2001.

On the financing front, Falconbridge has entered into an agreement with a syndicate of underwriters to sell US$250 million of 10-year notes, up from the US$200 million it originally expected to raise.

In M&A, Hub International has completed the sale of its underwriting subsidiaries, Old Lyme Insurance Company of Rhode Island, Inc. and Old Lyme Insurance Company, Ltd., to Fairfax Inc. The sale for Old Lymes’s book value of approximately $42.8 million plus interest of $700,000 will be used to pay down debt and represents a gain of approximately $2.6 million to Hub under Canadian GAAP.

Also, Nexfor Inc. is expanding its core specialty paper business. The company has finalized the acquisition of a 200,000-ton per year paper mill at Gorham, New Hampshire., and a 265,000-ton per year hardwood kraft pulp mill at Berlin, N.H. The Berlin and Gorham assets also include six hydroelectric facilities, which have been sold to Great Lakes Hydro Income Fund for US$31.5 million, equal to 100% of the cost of the total acquisition. Nexfor will invest US$14 million into capital improvements in the Berlin-Gorham operations over the next two years. An additional US$18 million in working capital will be required to startup the operations.

In New York, strong data and encouraging corporate news are also outweighing escalated tensions in the Kashmir region. The Dow is up 81 points as a result, to 9993. The S&P has gained 15 points to 1074. Nasdaq is up 12 ticks to 1644.

The S&P/TSX Venture index is also holding a small, one-point, gain to 1229. Volume remains robust at 24.1 million shares. ECU Silver Mining is leading trading at 8¢ per share on more than 1 million shares.