A TSX tote board is pictured in Toronto, on Dec.31, 2012. THE CANADIAN PRESS/Frank Gunn

TORONTO - Energy stocks helped Canada's main stock index close higher Thursday while U.S. markets were mixed and the loonie traded lower.

The Toronto Stock Exchange's S&P/TSX composite index closed up 8.85 points at 16,192.78, including a 2.06 per cent climb in the S&P/TSX capped energy index.

Oil and gas gains came as the July crude contract closed up US$1.22 or 1.88 per cent at US$65.95 as the price of the commodity continues to swing on supply speculation, especially out of Venezuela and Iran.

The uptick in crude prices didn't put the Canadian dollar in positive territory though, as the traditional correlation between the two has split, said Kash Pashootan, chief investment officer at First Avenue Investment Counsel Inc.

"On days like today you're seeing that correlation broken, you're seeing oil prices higher and the Canadian dollar cheaper."

The Canadian dollar was down 0.35 of a US cent to average 77.09 cents US Wednesday as the US dollar strengthens on its stronger economy, said Pashootan.

"You're seeing the market start to identify the divergence between the overall health of the U.S. economy compared to the overall health of the Canadian economy."

The Bank of Canada said in a report Thursday that the housing market and high levels of consumer debt are still the top vulnerabilities for the financial system, but that both have shown signs of easing.

Pashootan said he's not convinced that the picture is improving and that the Canadian economy has yet to feel the full effects of recent interest rate hikes.

"I disagree with Bank of Canada, I don't think those key risks are easing. I think it's premature to be cheering that those risks are subsiding. The fact of the matter is when you raise interest rates, it takes several quarters for the implications of higher rates to play themselves out for the average household."

He said Canada has yet to go through a credit reset cycle like the U.S., making the economy more vulnerable.

"Not only have we not gone through a credit reset cycle, but we have continually grown household debt as a percentage of income," said Pashootan.

In New York, the Dow Jones industrial average closed up 95.02 points at 25,241.41. The S&P 500 index ended down 1.98 points at 2,770.37 and the Nasdaq composite index was down 54.17 points at 7,635.07.

The July copper contract closed up a penny at US$3.27 a pound after climbing five cents earlier in another day of gains for the metal as labour worries at the world's largest copper mine in Chile raise supply concerns.

The S&P/TSX base metal index had seen strong gains in recent days on the price climb, but it was down Thursday as investors took profits, said Pashootan.

The July natural gas contract ended up three cents at US$2.93 per mmBTU and the August gold contract was up US$1.60 cents at US$1,303 an ounce.

Cheese and dairy producer Saputo Inc. closed down $1.90 or 4.3 per cent at $42.25 after releasing quarterly results that were below analyst expectations.

Questerre Energy Corp. saw it's share price plunge 31 cents or 31.31 per cent to 68 cents after Quebec released draft oil and gas regulations that the company says will effectively ban fracking and any meaningful exploitation of natural gas in the province.

News from © The Canadian Press, 2018