TORONTO - The Toronto stock market chalked up a modest advance Friday despite an unexpected decline in Canada's economy in November as the energy sector ran ahead amid a sharp gain in oil prices.

The S&P/TSX composite index closed up 36.2 points at 14,673.48 as Statistics Canada said gross domestic product in November declined 0.2 per cent, worse than the flat showing that economists had expected after a 0.3 per cent increase in October.

The Canadian dollar plunged to fresh six-year lows on the data, down 0.63 of a cent to 78.67 cents US.

Worries that lower than expected fourth-quarter economic growth in the United States could herald an economic slowdown pushed New York indexes lower. GDP for the period came in at 2.6 per cent, down sharply from five per cent in the third quarter. Economists had generally expected a reading of 3.1 per cent.

The Dow Jones industrials tumbled 251.9 points to 17,164.95, the Nasdaq fell 48.17 points to 4,635.24 and the S&P 500 index lost 26.26 points to 1,994.99.

The American GDP report was of particular concern as the U.S. economy has been the top global economic performer for many months. Growth in China has stalled and the European Central Bank is just now embarking on a program of quantitative easing aimed at stabilizing the eurozone economy and boosting inflation.

"The U.S. is seen as the one bright light globally that has been doing very well and the question mark is: (Is) that going to continue" said Scott Vali, vice-president, Canadian equities, CIBC Asset Management.

Strength on the TSX came primarily from the resource sectors with the energy group moving ahead almost five per cent as oil climbed $3.71 to US$48.24 a barrel.

Traders looking for a bottom to the plunge in prices reacted positively to news of a big drop in U.S. rig counts as producers respond to oversupply. Investors also drove up stocks in companies taking strong measures to deal with the drop in prices, including slashing spending plans and in some cases cutting dividends.

A major gainer was Canadian Oil Sands Ltd. (TSX:COS), which said Thursday that it was slashing its quarterly dividend to five cents a share. It had already announced a cut in the payout in December to 20 cents from 35 cents at a time when oil was about US$67 a barrel. COS shares gained $1 or 14.7 per cent to $7.85.

The base metals sector rose 4.2 per cent as March copper rose four cents to US$2.47 a pound.

The gold sector was ahead four per cent as April bullion gained $23.30 to US$1,279.20 an ounce.

The TSX financial sector was the major weight, down 2.25 per cent after Barclays Bank downgraded several of the major Canadian banks, saying that "slower than anticipated economic growth will weigh on the earnings growth and valuations of the group."

Barclays downgraded the stock of Bank of Montreal (TSX:BMO), Royal Bank (TSX:RY) and TD Bank (TSX:TD) — three of the Big Six — plus Quebec-centred Laurentian Bank (TSX:LB) to underweight from equal weight.

Barclays called last week's surprise quarter-point cut to a key Bank of Canada rate "a net negative" for the banks.

"If it's not energy, it's the financials that will move the market and right now, investors are concerned rate cuts will squeeze margins," Vali said.

The TSX finished the week with a gain of 113 points or 0.8 per cent, led by gains in the energy, tech and consumer staples groups. Base metals were the biggest losers as demand concerns continued to push copper down to fresh six-year lows.

News from © The Canadian Press, 2015