Source: The Canadian Press

The Toronto stock market could find some support at the open Thursday from the energy sector as oil prices climbed amid a sharp drop in U.S. supplies and rising hopes for a strong economic recovery.

The Canadian dollar moved up 0.13 cent to 95.57 cents US.

U.S. futures pointed to a flat open following two days of strong gains with the Dow Jones industrial futures were 12 points lower to 9,968, the Nasdaq futures slipped 2.5 points to 1,787 while the S&P 500 futures were off 2.3 points to 1,057.

The August crude contract on the New York Mercantile Exchange ran ahead 44 cents to US$74.51 a barrel after the American Petroleum Institute reported late Wednesday that U.S. crude inventories plunged 7.3 million barrels last week, much more than the drop of 3.5 million barrels forecast in an analyst survey by Platts, the energy information arm of McGraw-Hill Cos.

Inventories of gasoline and distillates also fell, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data later Thursday.

Other commodity prices were little changed with the September copper contract on the Nymex unchanged at US$3.02 a pound while the August bullion contract in New York climbed 80 cents to US$1,199.70 an ounce.

Economic hopes were lifted after the International Monetary Fund raised its 2010 world growth forecast to 4.6% from 4.2% in April and boosted estimates for the United States and China.

The IMF also warned that the European debt crisis could pose a risk to global growth but said a return to recession was unlikely.


The forecast, along with a strong profit forecast by State Street bank in the U.S. helped boost confidence in the upcoming corporate earnings season.

The State Street report also encouraged buyers to pick up stocks that have been beaten down recently because of worries the global recovery is losing traction. Bargain hunting helped push the TSX up 197 points on Wednesday while the Dow industrials jumped 275 points.

In Europe, the committee subjecting some of the region’s biggest banks to stress tests said it has widened the factors aimed at determining their financial health. That reinforced confidence in the results, which will be published later this month.

At the same time, American futures weakened as early reports from U.S. retailers show sluggish June sales and shoppers buying mostly deeply discounted clothing amid escalating job worries.

As merchants report their results Thursday, Costco Wholesale Corp. posted a solid revenue gain, but it was fuelled by its international business. Many teen merchants including The Buckle Inc., Hot Topic Inc. and The Wet Seal Inc. are reporting decreases in revenue.

Increasing confidence also sent overseas markets higher.

In Asia, Japan’s benchmark Nikkei 225 stock index jumped 2.8%, Australia’s S&P/ASX 200 climbed 2.4% and Hong Kong’s Hang Seng index rose 1%.

London’s FTSE 100 index gained 1.22%, Frankfurt’s DAX was up 0.33% amid official data showing a strong rise in both imports and exports in Germany, Europe’s biggest economy. The rise in May suggests industry is eagerly importing materials necessary for production and that exporters continue to benefit from a weak euro.

The Paris CAC 40 advanced 1.23%.

Meanwhile, interest rates are staying at historic lows in Europe.

The European Central Bank has left its benchmark interest rate unchanged at a record low of 1% for the 14th consecutive month. And The Bank of England has kept its base interest rate at a record low of 0.5% for the 17th consecutive month and left its asset purchasing program on hold.

In corporate news, Cogeco Cable Inc. (TSX:CCA), Canada’s fourth-largest cable company, reported quarterly profit of $31.2 million, down slightly from $32.4 million a year ago. Revenue came in at $319.3 million, up from $305 million in the year-earlier period.

Mala Noche Resources Corp. (TSXV:MLA) has increased the price it will pay for Goldcorp’s San Dimas mines in Mexico by about 5% and revised other terms of the transaction. The junior mining company, based in Vancouver, will now pay US$510 million in cash, shares and debt to Goldcorp (TSX:G), up from $500 million announced last month.

Mongolian lawmakers have approved a plan authorizing the government to raise US$1.5 billion to develop the huge Tavan Tolgoi coking coal deposit through an overseas share sale. Tavan Tolgoi’s more than six billion tons of coal have attracted interest from 10 international mining companies, including China’s Shenhua Energy, a Russian consortium led by Gazprom and Australia’s BHP Billiton (NYSE:BHP).