Relief that an oil storage explosion wasn’t the work of terrorists helped drive U.S. markets sharply higher Friday. A drop in the price of gold, however, kept the TSX from joining the U.S. rally.

The S&P/TSX composite index slipped 7.48 points to 6,558.63, but advanced 71.5 points, or 1.1%, on the week.

Gold-mining shares fell 3% as signs that a war in Iraq may be averted cut into the metal’s safe-haven attraction.

Placer Dome fell 64¢ to $14.90, while Meridian Gold dropped $1.40 to finish at $21.60.

TSX energy stocks rose 0.58% after the explosion and fire in New York pushed both crude oil and natural gas prices higher.

Precision Drilling rose $1.07 to $55.20, while Petro-Canada advanced 66¢ to $52.16.

The TSX information technology sector fell 1.38%, hurt by a cautious forecast from U.S. software maker BEA Systems Inc. ATI Technologies Inc. fell 24¢ to $6.46.

Toronto volume was 179.1 million shares worth $2.39 billion. Advances beat declines 562 to 504, with 211 unchanged.

The S&P/TSX Venture composite index closed up 7.17 at 1102.20. Trading was heavy on a volume of 39.6 million shares worth 19.6 million dollars, with 240 advances, 201 declines and 551 issues unchanged.

In New York, stocks rallied on Friday, capping a second straight week of gains, as the expiration of February options and hopes that war may be averted helped push share prices higher.

U.S. markets got a further boost following comments from an Iraqi official that Baghdad was willing to hold talks with the United States.

Vice president Taha Yassin Ramadan said Iraq was “ready for dialogue with the American administration to build economic ties and cooperation” if it dropped its plans to invade his country.

News of the comments sent the markets higher.

The Dow Jones industrial average ended up 103.15 points at 8,018.11. The S&P 500 Index gained 11.07 points to 848.17. The tech-heavyl Nasdaq composite index gained 17.79 points to end at 1,349.02.

For the week, the Dow was up 1.38%, while the Standard & Poor’s 500 was up 1.59%. The Nasdaq was up 2.96%.

The Canadian dollar closed unchanged from Thursday at US66.45¢.