Markets soar triple digits

North American markets piled on the gains Tuesday, buoyed by a better-than-expected U.S. economic data and a sagging American dollar.

In Toronto, the S&P/TSX composite index closed up 175.1 points, or 1.4 per cent, to 12,498.0  after the U.S. Institute for Supply Management's index on the non-manufacturing sector rose to 53.2 in September.

That was better than the 52 reading economists expected and up from the 51.5 reading in August.

Markets also rose after the central bank of Japan surprised investors by slashing interest rates to near zero in a new round of economic stimulus and amid a continued decline in the U.S. dollar, which dropped to its lowest level against the euro in eight months.

The U.S. currency reached $1.3851 per euro, its weakest since Feb. 4.

Traders are speculating the U.S. Federal Reserve will buy more U.S. government debt, which would put downward pressure on the greenback.

In New York, major indices closed at five-month highs.

The Dow Jones industrial average was up 193.45 points, or 1.8 per cent, to 10,944.72.

The Nasdaq composite index climbed 55.31 points, or 2.4 per cent, to 2,399.83 while the S&P 500 index was ahead 23.69 points, or 2.1 per cent, to 1,160.72.

"A lot folks who have cash on the sidelines are being drawn into the market because they don't want to be left behind," Robert Pavlik, chief market strategist at Banyan Partners in New York, said.

S&P 500 could rise further

Pavlik said the S&P 500 may not be finished with its gains.

"I think there's potential to get to 1,200 by the end of the year."

Gareth Watson, director of Canadian equities with the Portfolio Advisory Group, noted that anything illustrating a continued economic expansion "is nothing to shake a stick at when you have the bears out there calling for a double dip recession."

"When we see data like this come out it at least suggests the fact the doomsday scenario for the U.S. economy is not exactly going to pan out. It does not dismiss the fact, though, that this economy is recovering very slowly, which most people should have expected and do expect."

The sliding U.S. dollar affected the loonie and commodities, which are priced in U.S. currency.

The Canadian dollar edged up 0.58 of a cent to 98.43 cents US, its highest level since mid-May, during trading and closed up 0.50 of a cent at 98.35.

The November crude contract on the Nymex rose $1.35 to $82.82 US a barrel.

The widely traded December bullion contract in New York gained $23.60 to $1,350.70 US an ounce.