Stocks are roaring ahead Tuesday on the prospect of more cuts to Canadian interest rates. Consumer inflation readings were on the low side this morning, spurring talk of a rate cut in September, and boosting investor optimism.

As a result, the S&P/TSX composite index is 86 points higher at 7,497. Volume is decent, too, with 128.7 million shares crossing the floor.

Buying is way ahead of telling by a margin of 18:5. Market breadth is also decisively positive, with winners outnumbering losers 31:19.

The rate cut talk has tech stocks roaring ahead, up 3.4%. Golds are up, too, gaining 3.8%. The heavyweight financials have also added 1.2%. Every other sector is up, but these three groups are the real power plants for the rally.

Nortel is leading techs higher, gaining 3.7% on heavy volume of 17.3 million shares. Celestica is up almost 10%, and Zarlink Semi has gained 5.6%, in active trading. BCE is up 1% too.

The banks are particularly happy with talk of a rate cut, sending CIBC up 2.5%, Scotia is 1.7% higher, followed closely by TD Bank. Royal Bank is up just 0.8% on news that it will receive about $195 million to partly settle a dispute with Rabobank Group over its dealings with Enron Corp.

The golds are the other big gainers, led by a 7% gain in Aur Resources. Agnico Eagle is up 5%, and Glamis Gold has gained 4.6%.

Miramar Mining is up 5% on news that it has completed a bought deal for gross proceeds of $35.1 million. The proceeds of the issuance will be used for the continued exploration and development of the Hope Bay project, and for general working capital.

Eldorado Gold has received a receipt for its prospectus for a $62 million bought deal.

Other notable gainers include Major Drilling, Weston and Bombardier.

On the downside, Alcan is a little weaker. Air Canada has lost 4.5%. The Clean Power Income Fund is own 4.3% on news that it lost $8.85 million in the second quarter.

There is some profit-taking in recent winners including Ballard Power, Ivanhoe Energy and Nexen.

In other earnings news, Boston Pizza Royalties Income Fund reported that its second quarter profit fell to $2 million.

Indigo Books & Music Inc. said that it lost $11.54 million in the first quarter.

Stocks have been much more restrained in the U.S., amid some mixed economic data. The Dow has been positive for much of the morning, but is turning lower at midday. It is now down 15 points to 9,397. The Nasdaq composite index is 13 points higher at 1,752. The S&P 500 is unchanged at 1000.

The small caps are also rallying impressively. The S&P/TSX Venture composite index is up six tics to 1,241. Volume is quite strong at 22.4 million shares. Aquest Explorations is leading the way, up 7¢ to 63¢ on 1.35 million shares.