The Canadian Press

The Toronto stock market closed sharply higher Tuesday as bank and insurance stocks took off in the wake of a solid earnings report from Bank of Montreal while a weaker U.S. dollar sent commodity prices up.

The S&P/TSX composite index rose 100.25 points to 11,828.31, finally closing above where it started the year for the first time since Jan. 19.

“That’s the kind of market you have, one day you have optimism, the next day pessimism,” observed Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.

The TSX financial sector was stronger, up 1.08%, as Bank of Montreal (TSX:BMO) reported a $657-million profit in its first quarter, up from $225 million a year ago. Its total revenue increased by 24% from a year earlier to $3.02 billion, with its Canadian operations accounting for most of the growth.

BMO also reduced its provisions for credit losses by $95 million to $333 million.

“That’s a good thing,” Mastracci said.

“If we weren’t seeing that, I would have some cautions on the banks.”

Shares in Royal Bank (TSX:RY), which reports earnings on Wednesday, climbed 89¢ to $58.24.

The Canadian dollar was up 0.47 of a cent to US96.48¢ after the Bank of Canada said it will leave its key interest rate unchanged at 0.25% to help the economy recover from recession.

Canada’s central bank reiterated that it will likely leave its policy rates at that level until the end of the second quarter. But it also warned that “the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada.”

Bank of Canada leaves rate unchanged

Meanwhile, the energy sector was ahead 0.75% as April crude contract on the New York Mercantile Exchange climbed 98¢ to US$79.68 a barrel. Suncor Inc. (TSX:SU) improved 51¢ to $31.10 and EnCana Corp. (TSX:ECA) climbed 37¢ to $35.68.

Gold stocks advanced as the April gold contract on the Nymex gained $19.10 to US$1,137.40 an ounce. Barrick Gold Corp. (TSX:ABX) was ahead 90¢ to $40.95 while Goldcorp Inc. (TSX:G) rose 71¢ to $40.73.

The base metals sector rose 0.76% while May copper was ahead 6¢ at US$3.41 a pound amid concerns that the earthquake in Chile could curtail supplies of the metal. Sherritt International (TSX:S) advanced 30¢ to $7.80 while FNX Mining (TSX:FNX) rose 26¢ to $13.15.

The TSX Venture Exchange was up 10.54 points to 1,548.15.

New York markets faded in the last hour of trading after making headway from an upbeat Japanese employment report and growing hopes European leaders will complete a bailout for debt-burdened Greece.

But investors are starting to turn cautious ahead of the key U.S. non-farm payrolls report for February which is being released Friday.

The Dow Jones industrial average closed up 2.19 points to 10,405.98.

The Nasdaq composite index rose 7.22 points to 2,280.79 while the S&P 500 index advanced 2.6 points to 1,118.31.

Japan’s unemployment rate fell in January for the second straight month and household spending posted solid growth, providing the latest signal the world’s second-largest economy was healing.

Greece’s debt problems have added volatility to markets around the world for more than a month. Investors are worried that the country’s mounting debt problems will spread throughout Europe and upend a global recovery.

Merger activity had also lifted stocks. CF Industries made another offer for fertilizer maker Terra Industries, which last month agreed to be sold to Norway’s Yara for US$4.1 billion.

CF is itself resisting a takeover bid from Agrium Inc. (TSX:AGU), which has been pursuing the Illinois-based company for about a year _ although on the condition that it drops the Terra bid. Agrium rose 70¢ to $69.37.

In other corporate news, PetroBakken Energy Ltd. (TSX:PBN) shares were off 42¢ to $28.13 as the company continues to growing its presence in the oil-rich Pembina region of western Alberta. It has purchased an unnamed private oil and gas company for $251.4 million.