Business

The Toronto stock market looked set to extend gains to a fourth session Friday amid rising prices for copper.

The Canadian dollar backed off 0.2 of a cent to 101.15 cents US after closing at a fresh 3 1/2 month high Thursday amid a lower than expected reading on inflation.

Losses in the loonie picked up after Statistics Canada reported that the Consumer Price Index declined 0.1 per cent on a seasonally adjusted basis in July, after decreasing 0.2 per cent in June. Economists had looked for a 0.1 per cent rise. This marked the third consecutive monthly decline in the seasonally adjusted CPI.

The agency said Friday that consumer prices rose 1.3 per cent in the 12 months to July, following a 1.5 per cent gain in June.

Core inflation, which excludes volatile items like energy and fresh fruit and vegetables, rose 1.7 per cent in the 12 months ended in July, down from a two per cent reading in July

Analysts suggested the data represented another reason for the Bank of Canada to keep interest rates on hold.

"With core inflation running below target and external headwinds still blowing, we don't expect the Bank of Canada to resume tightening until well into next year," said BMO Capital Markets senior economist Robert Kavcic.

U.S. futures were mainly tepid at the end of a positive week, with the Dow Jones industrials unchanged at 13,225, while the Nasdaq futures were 5.5 points higher to 2,769 and the S&P 500 futures dipped 1.1 points to 1,412.

The TSX also finished at a 3 1/2 month high Thursday, closing above 12,000 for the first time since early May when the European debt crisis took a turn for the worse as markets focused on high debt levels in Spain. Traders were encouraged by a solid reading on American housing starts and hopes that central bankers are prepared to do whatever is necessary to keep the economic recovery on track and preserve the European monetary union.