Toronto stocks are making gains on a couple of stronger than expected economic reports. Canada’s Business Conditions Index improved, suggesting that manufacturing is on the rebound, and building permits jumped 8%.

At midday, the S&P/TSX composite index is up by 27 points to 7,871. Volume is very heavy today at 175.2 million shares, with the buying almost doubling the selling action. Market breadth is decidedly positive too, with winners edging losers by about six to five.

Industrial stocks are leading the rally today, up 1.2%.

Gold stocks are up about 1%, following a rebound in the metal’s price today.

Most other sectors are reporting modest gains, although there are slight slides in energy plays and utilities.

CAE is powering the industrials, up almost 7% on news that it has been awarded a subcontract from Lockheed Martin that are valued at more than $100 million.

Research in Motion is leading the techs with a 4.4% gain. BCE and CSI Wireless are up today, too. However, Nortel is down a little, albeit on relatively modest volume.

Financial stocks are seeing lots of action today, particularly the fund companies. CI Fund Management is up almost 5% in heavy trading of more than 4.8 million shares. AGF has jumped 5.5% in active trading, too.

There is also some compelling upside action in CIBC and Royal Bank, but TD Bank is down a little, and Kingsway Financial has dropped 1.7% in active trading.

Elsewhere, there are strong gains for Inco, Ivanhoe Energy, Agricore, Transat and Saskatchewan Wheat Pool. Barrick and Placer are leading the gains in golds, but the bigger price jumps are coming in smaller plays such as Aur Resources, Great Basin Gold, Northern Orion Exploration, and Canico.

On the downside, EnCana is leading energy stocks lower, joined by TransAlta. But there is also conspicuous weakness in Ivanhoe Mines, Breakwater Resources, Tahera, Rona, Gennum, Patheon and trusts such as Atlas Cold Storage and Specialty Foods.

In earnings news, Talisman Energy Inc. reported that its net income during the last quarter was $126 million down from $151 million for the quarter a year ago. The drop came after it sold off its controversial Sudan operations.

St. Lawrence Cement’s net earnings for the quarter reached $35.3 million, which was slightly under last year’s record net earnings of $36.7 million.

Ultra Petroleum’s earnings increased to $10,327,987 for the quarter, compared with $961,286 for the same period in 2002.

Industrial-Alliance Life Insurance Co reported that it earned $36.3 million in the quarter, a 27% increase over the same period last year. Although last year’s income, as with all 2002 figures, has been restated in accordance with accounting principles to take into account the stock option charge, which the company began recording in 2003.

In New York, stocks have barely moved all day, gyrating around the unchanged level, absent any real market-moving news there. The Dow Jones industrial average is down 17 points to 9,841. Nasdaq composite index is down eight points to 1,960. The S&P 500 has dropped five points to 1,054.

The S&P/TSX Venture composite index is sporting a two point gain to 1,579. Volume is strong there too at 47.3 million shares. Oilexco is leading the trade, up 2¢ to $1.25 on 2.1 million shares.