The Toronto stock market maintained a modest gain late Tuesday morning amid hopes that the Chinese government and U.S. central bank will move to launch stimulus measures to boost their slowing economies.The S&P/TSX composite index advanced 26.39 points to 12,241.82 after China’s premier Wen Jiabao promised more tax cuts and measures to boost consumer spending during a speech to the World Economic Forum on Tuesday. The TSX Venture Exchange rose 3.44 points to 1,274.15.The Canadian dollar was up 0.58 of a cent to a 13-month high of 102.88 cents US as the greenback weakened ahead of the Federal Reserve’s two-day meeting on interest rates. The U.S. central bank could announce another round of quantitative easing, which would see the Fed print more money to buy up bonds in order to keep interest rates low and encourage lending.U.S. markets were higher as the Dow Jones industrials gained 87.13 points to 13,341.42. The Nasdaq composite index was up 10.85 points to 3,114.87 and the S&P 500 index was ahead 6.83 points to 1,435.91.There were increased expectations that the Fed would provide another jolt for the economy after jobs data released Friday failed to meet modest expectations of 125,000 new jobs. Instead, the U.S. economy cranked out 97,000 jobs and employment numbers for June and July were revised downward.However, there is a degree of uncertainty as to whether the Fed will act now, especially as it may not want to become a key point of debate in the upcoming U.S. presidential election.“They can’t be seen to be doing too much in the way of massive stimulus,” said Gavin Graham, president of Graham Investment Strategy. “For example, in the days when the Fed could still cut interest rates, by the time you got to July, August, that was about as late as you could go in terms of changing rates because after that it would be attempting to influence the election.”Meanwhile, Wen’s commitment to stimulative measures came a day after data showed that China’s economic slump is worsening.China’s imports declined 2.6 per cent from a year earlier during August, below analysts’ expectations of growth in low single digits. That came on top of August’s decline in factory output to a three-year low and other signs growth is still decelerating despite repeated stimulus efforts.A slowing Chinese economy is particularly bad news for commodity prices and stocks on the resource-intensive Toronto stock market.Resource stocks led TSX gainers while commodities moved higher.The energy sector was ahead 0.54 per cent as the October crude contract on the New York Mercantile Exchange moved up 58 cents to US$97.12 a barrel. Canadian Natural Resources (TSX:CNQ) was up 28 cents to $31.91 while Cenovus Energy (TSX:CVE) advanced 18 cents to $34.13.The mining sector was up 1.17 per cent while December copper on the Nymex was up two cents to US$3.71 a pound, adding to a 17-cent jump over the past two sessions. Teck Resources climbed 78 cents to $30.01 while HudBay Minerals (TSX:HBM) was up 17 cents to $9.26.December bullion gained $8.40 to US$1,740.20 an ounce, pushing the gold sector up about 0.8 per cent. Goldcorp Inc. (TSX:G) improved by 36 cents to $41.57 while Kinross Gold Corp. (TSX:K) ran ahead eight cents to $9.30.Industrials also provided lift as Canadian National Railways (TSX:CNR) advanced 80 cents to $91.15.Traders also took in a sobering warning from Moody’s Investors Service. The ratings agency says it would likely cut its “Aaa” rating on U.S. government debt, probably by one notch, if key budget negotiations fail.If Congress does not reach a budget deal, more than US$600 billion in spending cuts and tax increases will kick in next year, a scenario that’s been dubbed the “fiscal cliff” because it is likely to send the economy back into recession and drive unemployment up.Traders also looked ahead to an important court decision being handed down on Wednesday. A German court is expected to rule on a request to block the country’s approval of the eurozone’s permanent bailout fund, the European Stability Mechanism, or ESM.The Germany Federal Constitutional Court on Tuesday rejected a last-minute plea to postpone its ruling. The postponement plea was brought by Peter Gauweiler, a backbench lawmaker with Chancellor Angela Merkel’s conservative bloc and other plaintiffs.They had argued the European Central Bank’s decision last week to buy up government bonds “created a completely new situation” regarding whether the €500 billion fund was constitutional. The court’s decision on the injunction is widely anticipated as a harbinger of how it might rule on the constitutionality of the ESM overall.European bourses were mixed with London’s FTSE 100 index down 0.07 per cent, Frankfurt’s DAX rose 1.14 per cent and the Paris CAC 40 added 0.08 per cent.In corporate news, U.S. mall owner General Growth Properties, Inc., whose major shareholder is Toronto-based Brookfield Asset Management (TSX:BAM.A), has rejected an activist investor’s push for a sale of the company to a rival American mall owner.The board of directors at GGP filed a letter Monday to Bill Ackman’s Pershing Square Capital saying that it has decided to continue its current path for growth. Brookfield shares dipped 38 cents to $33.87.
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