TORONTO: Canadian stocks finished higher for the second-straight session on Wednesday as energy issues were boosted by higher oil prices and improved US housing data helped offset broader concerns about the euro zone economy.
Eight of the TSX's 10 main sectors were up, led by the oil and gas index, helped by a rise in US February crude, which gained more than $1 to settle at $98.67 a barrel as inventories dropped to their lowest level in nearly three years.
Canadian Natural Resources led the sector's gains, climbing 1.4 percent to C$36.75.
The Toronto Stock Index ended up 36.65 points, or 0.31 percent, at 11,753.53, its highest close in more than a week. Volumes were thin ahead of the Christmas and New Year holidays.
A rise in US home sales and a decrease in the inventory backlog were the latest positive signs that the US's ravaged housing market was headed in the right direction. Data on Tuesday showed housing starts scaled a 1-1/2 year high in November.
"We're starting to form a bottom in here and if that's the case then house starts and building permits will firm a little bit as we go forward," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
Investors were hopeful a rebound in housing was a further indication of a strengthening US economy, as the housing market has traditionally been a huge source of jobs.
The US data helped offset persistent concerns about Europe's debt crisis and a potential slowdown in the world's largest economic bloc.
Markets initially reacted positively to news the European Central Bank lent 489 billion euros ($641.08 billion) to banks to ease the inter-bank credit crunch and tempt lenders to buy higher-yielding Italian and Spanish debt, but optimism that the funding would ease Europe's two-year-old debt crisis quickly faded.
"Borrowing money is another Band-Aid, but the patient requires something more than additional Band-Aids if it's going to get better," said Peter Chandler, senior vice-president and director at Canaccord Wealth Management.
Canadian financial issues, which have little exposure to risky European debt holdings, have recently traded with the headlines but were little changed after the ECB funding measure.
Toronto Dominion Bank was the biggest negative, sliding 0.4 percent to C$73.40.
The heavily weighted materials sector was the main drag on the index, led lower by base metal and gold miners on concerns that Europe's debt problems could cause a wider global slowdown that would cut demand for industrial and precious metals.
First Quantum Minerals, down 1.5 percent to C$18.81, led the decline.
Volume traditionally drops as the Christmas and New Year holidays approach, often making the equities market more volatile.
"Sometimes with reduced volume you can get more exaggerated moves, but you shouldn't read much into them because they are on lower volume," said Chandler.
As an example, he noted wide swings by Research In Motion , whose share price surged nearly 10 percent to C$14.17 on Wednesday, after it was reported that Amazon.com had mulled making a takeover offer for the BlackBerry maker.
The sharp rise came on the heels of RIM's stock hitting a multi-year low of C$12.80 in the previous session.
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