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Canadian Market Wrap

TSX higher on commodity strength, First Uranium surges 48%

Canadian markets were lifted by higher commodities on Friday, along with positive earnings reports from both companies at home and south of the border.

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Canadian markets were lifted by higher commodities on Friday, along with positive earnings reports from both companies at home and south of the border.

After noon, the S&P/TSX Composite Index rose 74.63 points, or 0.56%, to 13,508.93, while the S&P/TSX Venture Composite Index climbed 13.25, or 0.65%, to 2,052.30.

Crude oil was trading at around $99.81 per barrel, while gold futures climbed above $1,600 per ounce. The silver contract climbed more than 2.5%, alongside a slight price gain in base metal copper.

Lake Shore Gold (TSE:LSG) rallied more than 9% on Friday, after taking a tumbling in the last week following an announcement on Tuesday that it slashed its production outlook.

Gold giants Kinross (TSE:K), Goldcorp (TSE:G) and Barrick Gold (TSE:ABX) (NYSE:ABX) all gained around 2%, while New Gold (TSE:NGD) and Carpathian Gold (TSE:CPN) each saw increases of more than 3%. Yamana Gold (TSE:YRI) also moved up by 1.67%.

EMED Mining (TSE:EMD), which explores and develops natural resources like copper and gold, saw shares advance nearly 3%, while gold developer Osisko Mining (TSE:OSK) rose 1.4%. Katanga Mining (TSE:KAT), which has a copper-cobalt project in the Democratic Republic of Congo, climbed more than 2.4%.

Suncor Energy (TSE:SU) edged up slightly, while Talisman Energy (TSE:TLM) jumped 2%.

In Canadian corporate news, Calgary, Alberta-based Precision Drilling (TSE:PD) shares climbed more than 6%, after it swung to a profit in the second quarter, helped by a growth in rates and increased utilization on strong demand for drilling activities in Canada and the US.

In the three months ending June, 30, Precision Drilling’s revenue rose 31% to $345 million, while it posted net profits of $16 million, or six cents per diluted share.

Toronto-based electronic manufacturing services provider Celestica's (TSE:CLS) shares jumped more than 13%, as the the company posted net earnings of $45.7 million, or 21 cents per share, compared to $13.0 million, or 6 cents per share, a year earlier. Revenue rose 15% to $1.83 billion.

In other news, TMX Group (TSE:X) gained 1.4% after it announced late yesterday that it plans to hold formal talks with Maple Group Acquisition Corp, made up of several Canadian banks and pension funds. The consortium made a $3.7 billion takeover bid for the Toronto Stock Exchange Operator, back when it was still competing against the London Stock Exchange, whose bid fell through.

South Africa-focused gold and uranium producer First Uranium Corp (TSE:FIU) shares soared more than 48% after AngloGold Ashanti (NYSE:AU) announced it would acquire more than 47 million shares of First Uranium from Village Main Reef for CAD 60 cents each, equating to a near 20% stake. The deal represents a total value of around CAD 28 million.

In economic news, Statistics Canada said that inflation surprisingly eased in June, with the annual inflation rate at 3.1%, down from 3.7% in May, despite jumps in the cost of gasoline and food. The core rate, which excludes eight of the most volatile components like fuels, and mortgage interest costs, was 1.3%.

US Markets

Meanwhile, in the US, Caterpillar (NYSE:CAT) dragged down the Dow Jones Industrial Average on Friday, missing analyst estimates in the second quarter, on lower sales due to the Japan earthquake and slower demand in China.

However, McDonald's Corp (NYSE:MCD) announced Friday a 15% hike in its second quarter profits, driven by growth in all markets, beating analysts’ estimates.

General Electric (GE) Co (NYSE:GE) also reported a  21% increase in its second quarter earnings as its transportation unit saw strong growth, offseting weaker results in energy infrastructure and home and business services. Operating earnings rose to $0.34, topping estimates of 32 cents per share.

World Debt Issues

Focus from corporate results was shifted, however, on news of a new EUR109 billion bailout deal for Greece, which would include cutting interest rates the country pays on its debt, along with a longer 30 year repayment period to help with the country's existing debt load.

Fitch Ratings agency said though that the lower rates will mean investment losses for those holding the debt, resulting in a default for the country. However, the agency also said that the country could move up to junk-status as soon as it issues new, replacement bonds.

The new deal follows a EUR 110 billion bailout of loans from the EU and IMF last year, which did not help Greece reform itself. European markets rose on the news, with Britain's FTSE 100 up more than 0.5%.

In the US, while there were talks that a deal for raising the debt ceiling could be in sight, no agreements have yet been made, pushing closer to the deadline of August 2nd.

Quick facts: Canadian Market Wrap

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