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North American markets climbed higher Friday after positive data from the U.S. that showed strong signs of economic recovery and Canadian inflation slowed to a crawl.

"We continue to grind higher here," said Jason Hornett, a portfolio manager with Bissett Investment Management. "People continue to be more and more optimistic here in North America and it definitely bodes well for the stock market."

The S&P/TSX composite index jumped 42.03 points to 12,549.63.

Statistics Canada reported that consumer prices rose last month at the slowest rate in 3-1/2 years—coming in at 0.4%, which was below expectations.

The lack of inflation helped push the Canadian dollar down 0.79 of a cent to 97.33 cents US as the U.S. dollar also gained strength against other major currencies.

The loonie had dropped to 96.96 cents US in early trading, the lowest it's been in more than two months.

On Wall Street, signs of strength in the U.S. economy pushed the Dow Jones industrials index ahead by 54.14 points to 15,287.36. The S&P 500 jumped 7.92 points to 1,658.39, while the Nasdaq climbed 17.92 points to 3,483.16.

The U.S. Conference Board said its index of leading indicators gained 0.6% to 95 in April, after it saw a decline of 0.2% in March. The figure came in above what economists had forecast.

The index, which was buoyed by a sharp increase in applications to build new homes and condos, is intended to signal economic conditions three to six months out.

The board said the index is 3.5% higher at an annual rate than it was six months ago, suggesting an expansion for the economy, with the biggest risk being a drag from cuts in U.S. federal spending.

Meanwhile, the University of Michigan's consumer sentiment index was ahead to 83.7, higher than the 76.4 reported in April.

By mid-day, the Toronto Stock Exchange was experiencing a boost from most of its sectors, particularly energy and metals. The energy sector was up by nearly 1% as the June crude contract dipped three cents to US$95.13 a barrel.

The metals group was the leading advancer at 1.33%, as copper jumped ahead two cents to $3.32 a pound.

Gold prices continued to pull back. June gold bullion dropped $27.70 to US$1,359.20 an ounce, down nearly 5% this week. On Wednesday, it closed under $1,400 an ounce for the first time in a month.

Hornett said as the stock markets rise, traders will no longer be eyeing gold as a good investment.

"I think that people's expectations for the economy both in North America and globally just continues to improve, so that continues to reduce risk of a any sort of meltdown which makes the gold trade less and less attractive," he said.

Meanwhile, world stock markets shrugged off suggestions that the Fed may begin to reverse some of its asset purchase programs by the end of the summer.

On Thursday, John Williams, president of the Federal Reserve's San Francisco branch, sparked a minor sell-off in the markets after he said the central bank should consider ending its monthly US$85-billion bond purchases on signs of a recovery in the housing market

Britain's FTSE 100 rose 0.4% to 6,712.87. Germany's DAX climbed 0.2% to 8,390.04. France's CAC-40 was up 0.4% to 3,995.56.

Wall Street appeared ready to recoup Thursday's losses: Dow Jones industrial futures rose 48 points to 15,260 and S&P 500 futures rose 6.25 points to 1,654.

Earlier in Asia, Japan's Nikkei 225 index rose 0.7% to close at 15,138.12, reversing a lower open. Australia's S&P/ASX 200 added 0.3% to 5,180.80, pushed up by gains in BHP Billiton, the world's largest mining company. The stock rose 1.9% on bargain-hunting.

Originally published on Advisor.ca