TORONTO - Major North American indexes made gains as a potential U.S.-China trade deal appeared closer and oil prices advanced.

The S&P/TSX composite index climbed 5.16 points to 16,897.34, led by the energy sector.

In New York, the Dow Jones industrial average advanced 146.97 points to 27,649.78. The S&P 500 index rose 19.56 points to 3,112.76, while the Nasdaq composite gained 46.03 points to 8,566.67.

"It really feels like we're still caught in this, I don't know, quagmire ... of these trade headlines," said Greg Taylor, chief investment officer at Purpose Investments.

Trade headlines have been driving the market for the last year, he said, and especially so over the last month.

The first two days of this week saw an aggressive selloff as trade tensions rose. On Monday, China signalled retaliation for America's show of support for Hong Kong protesters. The next day, U.S. President Donald Trump said he has "no deadline" for a trade deal with China and he didn't mind waiting until after the 2020 election to secure one.

Over those two days, the TSX shed nearly 150 points, while major indexes south of the border also ended each day in the red.

That sentiment shifted Wednesday as investors saw renewed hope of progress toward the trade deal as Bloomberg cited individuals familiar with the talks as saying the two countries are moving closer to an agreement on rolling back some tariffs.

Now investors are focused on Dec. 15, said Taylor. If no deal is reached by that date, the U.S. will impose another round of tariffs on some Chinese goods entering the U.S. effective that day.

The Toronto index also saw a lift from a boost in oil prices. Shares in the energy sector gained, on average, 2.66 per cent of their worth as the January crude contract rose US$2.33 to US$58.43 per barrel.

In currency markets, the Canadian dollar traded for 75.63 cents US compared with an average of 75.18 cents US on Tuesday.

That strength came as the Bank of Canada announced Wednesday it would keep its key interest rate steady at 1.75 per cent. The central bank's overnight rate target has been set at that figure since October of last year.

Some of the bank's comments were probably more hawkish than some analysts had expected, said Taylor.

The Bank of Canada said there is early evidence that the global economy is stabilizing and growth is still expected to edge higher over the next couple of years.

The hawkish commentary raised some questions about when a rate cut would come, said Taylor, lowering the odds of a cut at the bank's next rate announcement in January.

With investors believing the bank may hold off cutting rates longer, that could cause some strength for the loonie, he said.

"When rates are being lowered, that usually means that people will go to other currencies."

Elsewhere in commodities, the January natural gas contract shed 4.2 cents to roughly US$2.40 per mmBTU. The February gold contract fell US$4.20 to US$1,480.20 an ounce and the March copper contract advanced 3.6 cents to about US$2.66 a pound.

This report by The Canadian Press was first published Dec. 4, 2019.

Companies in this story: (TSX:GSTSE, TSX:CADUSD=X)

The Canadian Press. All rights reserved.

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