Stocks are reacting positively to strong economic news on both sides of the border. Robust manufacturing shipments data was released in Canada. In the U.S., retail sales were on the low side, but consumer confidence, industrial production and pipeline inflation all showed tell-tale signs of growth.

At midday, the S&P/TSX composite index is up 19 points to the 7,787. Volume is quite heavy at 172.3 million shares, with the buying swamping the selling by more than four to one. Market breadth is of course much narrower, as winners outpace losers by a margin of 29:25.

Today’s gains are broad based, although they are generally modest. Only the gold and mining groups are up as much as 1%. There is also strength in materials, real estate, energy and financials.

Industrials and consumer discretionary stocks are down, however.

The big name golds are powering that sector forward on higher commodity prices. Placer Dome has added 0.7% in active trading. Bigger percentage gains are evident in smaller players such as Bema Gold, Bolivar Gold, Apollo Gold, Rio Narcea and Asia Pacific Resources.

Financial stocks are seeing some solid action, led by Sun Life, which is up 1% in active trading. Scotiabank and Royal Bank are both stronger, too.

Nortel is enjoying a 0.7% gain on revived volume, but it isn’t enough to carry the tech sector, which is more or less flat. Creo, Bakbone Software and Cognos are all down.

Eslsewhere, there is some strength in Alcan. Axcan Pharma and Cardiome Pharma are higher, too, as are Air Canada and Canadian Superior Energy.

On the downside, Atlas Cold Storage continues to see selling. It is down another 2.7%, following news of its latest accounting troubles.

There is also some selling in Esprit Exploration, Viking Energy, Bombardier and Canadian Tire.

In M&A news, Angiotech Pharmaceuticals is buying STS Biopolymers Inc. for approximately US$23 million in cash. STS is a privately owned company specializing in the development of biocompatible coatings for medical devices. The transaction is expected to close by the end of December.

On the flipside, Kingsway Financial Services is selling its 25% equity investment in USA Insurance Group to Bisys Group Inc. Net proceeds of the sale, which comprise cash and stock of Bisys, amounted to approximately US$19.6 million, which will generate a realized gain to Kingsway of approximately US$14.3 million.

In earnings news, Brascade Resources has posted net income of $55.9 million in its latest quarter, compared with a loss of $19.3 million in the third quarter of 2002.

ATS Automation Tooling Systems experienced net earnings of $400,000 in its quarter.

Tusk Energy reported that its earnings per share were 4¢ for the quarter compared with 7¢ per share during the second quarter.

Sierra Wireless has successfully closed its public offering for gross proceeds of US$74.8 million. Lehman Brothers Inc. and CIBC World Markets Inc. are the underwriters and joint bookrunners for the offering. The proceeds from the offering will be used by Sierra Wireless for working capital and general corporate purposes, including acquisitions.

In New York, traders appear to be a little less enthused by the stronger economic data, as they worry about the prospect for higher interest rates. The Dow Jones industrial average is up just four points to 9,842. The Nasdaq composite index is down 12 ticks to 1,955. The S&P 500 is more or less unchanged at 1,058.

The S&P/TSX Venture composite index is up a single point to 1,614. Volume is also solid there, with 42 million shares traded. Taseko Mines is leading the way, gaining 14¢ to 18¢ on 1.2 million shares traded.