A Thursday, Jan. 1, 2015 photo from files showing euro coins and banknotes shown by a salesclerk at a shop in Vilnius, Lithuania.Mindaugas Kulbis/The Associated Press
The Toronto stock market was higher after the European Central Bank announced a major stimulus program aimed at strengthening a weak economic recovery and stopping the euro zone from slipping into a deflationary spiral.
The S&P/TSX composite index ran up 137.2 points to 14,697.61 after ECB president Mario Draghi said the bank is launching a program of quantitative easing that will involve spending €60-billion a month to buy investment grade sovereign bonds.
There had been hopes Draghi would announce such a measure, which is aimed at getting eurozone inflation up to the ECB target of two per cent. He added that the program will start in March and continue through September 2016.
But Draghi indicated the program is basically open ended until inflation is back on track.
"I think had they not taken out the bazooka that we were all anticipating, that would have been a huge negative," said Allan Small, senior adviser at HollisWealth.
"Overall, it was widely expected."
The Canadian dollar was lower after the ECB announcement, adding to the 1.5 cent tumble Wednesday following the Bank of Canada's surprise quarter-point rate cut, which took a key lending rate to 0.75 per cent. The currency lost 0.05 of a cent to 81.02 cents US on Thursday.
New York markets were positive as the Dow Jones industrials gained 107.3 points to 17,661.62, the Nasdaq climbed 42.30 points to 4,709.72 and the S&P 500 index rose 14 points to 2,046.12.
In Toronto, industrials led the advancers, up one per cent as Canadian Pacific Railway posted quarterly net income of $451-million, or $2.63 per share, up from $82-million, or 47 cents a share, a year earlier. Results a year ago were affected by an impairment charge of $435-million. Adjusted earnings were $2.68 per share, 11 cents ahead of estimates. Revenue of $1.76-billion beat forecasts of $1.732-billion. CP also warned that 2015 profit could miss analysts' estimates as the slump in oil prices could affect crude shipments but its shares rose $2.82 to $229.78.
"It will be interesting to see what Canadian National Railway reports next week, if they also take down their guidance going forward," added Small.
"If they do, you know it's right across the board. If they show stronger guidance, than then maybe CN is the better buy going forward."
Mining stocks were positive as the gold sector was up 0.75 per cent while the February gold contract ran ahead $6.80 to US$1,300.50 an ounce.
The base metals sector rose 0.2 per cent as the March copper contact was five cents lower at US$2.57 a pound.
The TSX energy sector lost 0.9 per cent as oil prices fell sharply amid Department of Energy data showing a much greater than expected rise in U.S. inventories last week. The March contract in New York fell $1.51 to US$46.27 a barrel as supplies jumped 10.07 million barrels versus the 2.7 million barrel rise that had been expected.
Elsewhere, Royal Bank shares fell $2.15 to $74.46 as it moved to expand its wealth management business in the U.S. The bank announced an agreement to buy Los Angeles-based City National Corp. in a friendly cash and stock deal worth US$5.4-billion.
In the U.S., KeyCorp led gains among regional banks after fourth-quarter results topped analyst estimates. Southwest Airlines Co. jumped 6.7 per cent as profit rose 71 per cent on lower jet fuel prices. Union Pacific Corp. added 4.1 per cent as a strengthening U.S. economy and growing construction market boosted traffic on the rails in the fourth quarter.
U.S. economic data on Thursday showed more Americans than forecast filed applications for unemployment benefits last week, a sign of lingering holiday turnover.
With files from Bloomberg News