The Canadian Press

North American stock markets closed higher Tuesday after the U.S. Federal Reserve again pledged that interest rates will stay at historic lows to help the U.S. recover from a steep economic downturn.

The S&P/TSX composite index gained 80.6 points to 12,089.4, supported by rising commodity and financial stocks, its highest close since late September, 2008.

The Dow Jones industrial average rose 43.83 points to 10,685.98.

As expected, the Fed said that it plans to keep rates low for an “extended period,” which economists generally think means at least six more months.

“They acknowledged the fact that the economic recovery is strengthening and that’s patently obvious to anyone who follows the daily flow of economic data,” said Meny Grauman, senior economist at CIBC World Markets.

“I think there’s no surprise there – they have to keep a realistic assessment of the economy but balancing that out they do continue to stress the weak points of the economic recovery and so they continue to justify their low-rate policy and provide no suggestion that is going to change any time soon.”

Higher commodity prices helped push the Canadian dollar ahead 0.55 of a cent US to 98.62 cents US, its highest level since July, 2008.

The prospect of a widening spread between Canadian and American rates has also helped lift the loonie towards parity with the greenback in recent months. The Bank of Canada is expected to raise rates by up to three-quarters to a full point later this year, while the Fed moves more slowly because the American economy is weaker.

There was also positive news from the Canadian manufacturing sector. Statistics Canada reported that shipments rose 2.4% in January from the month before to $44.6 billion. It was the fifth consecutive rise.

Oil advanced amid indications from Saudi Arabia that this week’s OPEC meeting will decide to leave output unchanged.

The TSX energy sector was up 0.57% as the April crude contract on the New York Mercantile Exchange ran up US$1.90 to US$81.70 a barrel. Suncor Energy (TSX:SU) rose 32 cents to $31.36.

Encana Corp. (TSX:ECA) shares slipped 36 cents to $33.59. It said Tuesday that its natural gas inventories are enough for the company to more than double production over the next five years.

A falling U.S. dollar helped push the April bullion contract on the Nymex ahead US$17.10 to US$1,122.50 an ounce, taking the TSX global gold sector higher. Barrick Gold Corp. (TSX:ABX) climbed 77 cents to $40.64.

The May copper contract in New York added five cents to US$3.36 a pound and the base metals sector improved by 1.25%. HudBay Minerals (TSX:HBM) gained 24 cents to $13.60.

First Quantum Minerals Ltd. (TSX:FM) rose $3.10 to $91.28 as the company reported a fourth-quarter profit of US$227.2 million, reversing a year-ago loss of $491.6 million, as the gold and copper miner was helped by improved prices.

The financials sector was ahead almost 1% with TD Bank (TSX:TD) ahead $1.65 at $75.01 while Royal Bank was up 62 cents at $59.46.

Tech stocks held the TSX back as Research In Motion Ltd. (TSX:RIM) dropped 99 cents to $76.18.

There was also relief from an agreement by the European union to help Greece with loans if the debt-burdened country needs it. The exact form of the help for Greece – likely some form of bilateral loan – was yet to be decided.

Greece needs to borrow euro54 billion (US$74 billion) this year but is being forced to pay higher interest rates than more fiscally prudent European countries.

Meanwhile, Standard & Poor’s said Tuesday it was taking Greece off so-called credit watch. That means the agency is not thinking about downgrading the country’s credit rating for now.

“It’s another vote of confidence that one problem area in the world that captured the market’s attention for weeks and months now is continuing to fade into the background,” Grauman said.

“Greece now basically moves to the back burner and we wait for another country to have similar problems. Based on our fiscal analysis, there are definitely other candidates out there.”

The TSX Venture Exchange was 17.02 points higher at 1,578.53.

Other New York markets advanced following the Fed announcement. The Nasdaq composite index climbed 15.80 points to 2,378.01 while the S&P 500 index edged 8.95 points higher to 1,159.46.

In other corporate news, WestJet Airlines Ltd. (TSX:WJA) shares declined 56 cents to $13.31 after Sean Durfy resigned as president and CEO of the carrier effective April 1 for “personal reasons.” WestJet did not say whether Durfy was pushed out or left voluntarily, but the company has been hit by weak earnings and a problem-filled launch of a new reservation system that has eaten into profits.

@page_break@Western Coal Corp. (TSX: WTN) shares moved up 24 cents to $4.77 after the company projected sales of six million tonnes in fiscal 2011, which would be 75% more than in fiscal 2010.

Alamos Gold Inc. (TSX:AGI) shares gained 69 cents to $14.45 after reporting fourth-quarter earnings climbed to a record $20.1 million as it drove production higher but kept costs down. Revenues were up 62% to $52.6 million.

Kinross Gold Corp. (TSX:K) shares rose 46 cents to $18.43 after the miner reached a definitive agreement to buy the rest of Underworld Resources Inc. (TSXV:UW) in a previously announced stock-and-cash deal that values the junior mining company at $139.2 million.