Toronto stocks closed virtually flat Thursday as strength in oil and gas shares kept the market in the black. The S&P/TSX composite index finished up 6.43 points at 6,566.11.

Investors had to digest a surprise decline in Canada’s trade surplus and a smaller than expected rise in December retail sales.

The TSX oil and gas index climbed 0.83% after a BMO Financial Group economist warned Thursday that a war against Iraq could drive already-high oil prices up even more, possibly past US$50 a barrel.

EnCana rose 65¢ to $47.65, on news that it earned pro forma $1.25 billion in 2002. Daily pro forma oil and gas sales exceeded the midpoint of the company’s 2002 target range, driving the results.

Hurricane Hydrocarbons rose 50¢ to $16.85, while Suncor Energy advanced 44¢ to $26.65.

Mosaid Technologies shares slipped 8¢ to $5.45 after the company narrowed its losses and boosted quarterly revenue.

Placer Dome lost 85¢ to $15.54 after reported a fourth-quarter profit of US$6 million, down from US$29 million a year earlier and below analysts’ expectations.

Toronto market volume was 173.3 million shares worth $2.13 billion. Advances beat declines 564 to 502, with 199 unchanged.

The S&P/TSX Venture composite index closed up 0.33 at 1,095.03. Trading was heavy on a volume of 41.8 million shares worth $19.2 million dollars, with 220 advances, 192 declines and 574 issues unchanged.

U.S. markets ended lower as the release of gloomy economic data and fears of war in Iraq left investors with little appetite for buying stocks.

The market reversed early gains after higher-than-expected wholesale inflation, a record U.S. trade deficit and higher weekly jobless claims dampened investor sentiment.

A regional manufacturing report came in worse than expected. The Philadelphia Fed index fell to 2.3 in February, down from 11.2 in January.

The Dow Jones industrial average fell 85.64 points to 7,914.96. The broader S&P 500 shed 8.03 points ending at 837.10. The tech heavy Nasdaq Composite Index slipped 3 points, closing at 1,331.23.

The Canadian dollar continued to make gains on Thursday. The loonie closed at US66.45¢, up 0.35¢.