The Toronto stock market registered a solid advance Thursday after the European Central Bank announced a program to buy government bonds in order to lower the borrowing costs of countries that have been the most badly affected by the European debt crisis.
The program is called Monetary Outright Transactions and will see the ECB buy up government bonds on the secondary bond market, where previously issued securities are traded. ECB president Mario Draghi said the program is open-ended and will have no set limit on how much it can buy.
The S&P/TSX composite index ran ahead 149.59 points to 12,139.73, while the TSX Venture Exchange was 12.03 points higher at 1,258.3. The Canadian dollar was up 0.83¢ US at 101.75¢.
The ECB has been pressured to take action after Spain and Italy became the latest countries forced to pay yields in the seven-per-cent range on their benchmark 10-year bonds this year, a level that raised worries those countries could be forced to seek a bailout.
But analysts cautioned that this doesn't represent a fix for the eurozone debt crisis.
"It will help the markets in the short term but what it won't do is solve the problem long term," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.
New York markets closed at multi-year highs.
The Dow Jones industrial surged 244.52 points to 13,292 - its highest close since December 2007 - amid positive employment news a day before the release of the U.S. government's August non-farm payrolls report. The Nasdaq composite index climbed 66.54 points to 3,135.81 and the S&P 500 index advanced 28.68 points to 1,432.12, its highest level since January 2008.
Payroll firm ADP said the U.S. private sector created 201,000 jobs last month, much higher than an expected reading of 140,000.
Expectations for the government report Friday have been modest, with economists forecasting the U.S. economy created only about 127,000 jobs last month. Traders have been hoping a weak report would further convince the Federal Reserve to embark on another round of stimulus.
"There is still 100,000 job growth going on, so it's not necessarily bad news and that's where the Fed has to decide, OK we're seeing job growth, maybe not as much as we were hoping for, but it's also not zero either. Nothing in my mind is definitively bad, to say they need to do quantitative easing."
Canadian employment data will also be released Friday. Statistics Canada is expected to announce the economy cranked out about 11,000 jobs.
