The Toronto Stock Exchange posted a triple-digit rebound as gold hit a sevenmonth high after two of the most indebted European countries outlined new austerity measures.
The S&P/TSX composite index added 105.99 points to 12,338.85. The TSX Venture Exchange pushed ahead 15.45 points to 1,322.31.
Spain and Greece outlined plans to cut spending and raise taxes to convince international lenders and financial markets they are on the right track to cut their deficits.
The Canadian dollar gained 0.44 of a cent to US101.95¢, getting a boost after Spain announced its new budget.
The cuts in Spain are meant to show world investors and other countries that Spain can meet fiscal targets. The budget unveiling lifted stock markets from what had been only modest gains.
Wall Street was also higher, with the Dow ahead 72.46 points to 13,485.97 and the Nasdaq 42.90 points higher at 3,136.60.
Gold prices gained more than 1% Thursday, adding $26.90 to hit a new sevenmonth high of US$1,780.50 an ounce. The last time it traded at that level was Feb. 28.
In turn, the gold-heavy materials sector was one of the biggest gainers on the TSX, up 2% for the day with shares in Barrick Gold Corp. up 1.6% or 66¢ to $40.97.
The benchmark New York oil contract was ahead $1.87 at US$91.85 a barrel, while the December copper contract was 3¢ higher at US$3.74 a pound.
The gains also came amid expectations that the People's Bank of China will soon take more steps to stimulate the world's No. 2 economy, which has been slowing.
Worries about a slowing Chinese economy have combined with unrest in Europe to pressure the market this month.
And even as those worries persist, and the U.S. continues to churn out mixed economic data, sentiment will likely be buoyed into Friday, the last trading day of the third quarter, said Sadiq Adatia, chief investment officer at Sun Life Global Investments.
"I think people do want to buy some good names heading into Q4 and want to show that on their books," Adatia said.
The measures outlined Thursday by Spain and Greece highlight how Europe's struggling countries are battling public anger and flat-lining economies to push for more austerity - all with the aim of securing much-needed aid.
Investors were also reacting to a positive sign in a U.S. Commerce Department report on August business orders for durable goods. While the overall number dropped because of a huge decline in commercial aircraft orders, orders for machinery, electronics and other equipment rose 1.1%, the first increase since May.
