Loonie continues climb, tops 77 cents US

Canada's main stock index retreated while the oil-sensitive loonie climbed higher Friday, after rosy economic data increased the odds of an imminent rate hike from the central bank.

The Toronto Stock Exchange's S&P/TSX composite index gave back 31.23 points to 15,182.19, led by energy stocks, which dropped 0.53 per cent.

The financials sector of the TSX was down 0.39 per cent, while the consumer discretionary sector added 0.53 per cent and gold stocks were up 0.24 per cent.

Meanwhile, the Canadian dollar rose more than one-fifth of a cent to hit 77.12 cents US.

The gain in the loonie came as the August crude contract added $1.11 to $46.04 US per barrel and as Statistics Canada reported that the economy posted yet another month of solid growth in April.

• Economy expanded by 0.2% in April, in line with expectations

Meanwhile, a survey from the Bank of Canada found that business sentiment has climbed to its highest level since 2011.

"Over the last couple of weeks we have seen a change in the tone from the Bank of Canada in signalling that there is a higher probability of a rate increase in Canada, so that's being reflected in stocks," said Colum McKinley, vice-president of Canadian equities at CIBC Asset Management.

"The Bank of Canada is saying that the economy is stronger than they had envisioned, and ultimately that's good for earnings and profitability. On the financials, obviously higher rates are positive for bank earnings but investors will worry about the effect that could have on housing."

In New York, the Dow Jones industrial average gained 62.60 points to 21,349.63, the S&P 500 index added 3.71 points to 2,423.41 and the Nasdaq composite index declined by 3.93 points to 6,140.42.

Elsewhere in commodities, the August natural gas contract slipped nearly a cent to $3.04 US per mmBTU. The August gold contract was down $3.50 to $1,242.30 US an ounce and the September copper contract added two cents to $2.71 US a pound.