The Toronto stock market advanced Monday afternoon after solid manufacturing data from the U.S. and China sent commodity prices higher.

The S&P/TSX composite index was off early highs as losses mounted in the telecom and tech sectors on the first trading day of 2010. But the main index was still ahead 76.8 points to 11,822.9 as the Institute for Supply Management’s U.S. manufacturing index rose to a better-than-expected 55.9 last month from 53.6 in November.

A figure above 50 indicates expansion and the bigger the difference, the faster the expansion.

Other data showed China’s manufacturing sector expanded at its fastest rate in 20 months in December.

The monthly purchasing managers’ index – a key gauge of activity – for the 16 countries that use the euro rose to a 21-month high of 51.6, while the equivalent survey for Britain rose to a 25-month high of 54.1.

“I think you have all the pieces,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

“The news is better than expected on the economy and certainly in the U.S. and China, which are both global growth drivers. And I think that’s what everybody is watching, so we have commodities higher and no surprise the TSX is up as well.”

The Canadian dollar jumped 0.99 of a cent to 96.14 cents US – its highest level since mid-October – as the data pushed the American currency lower.

The economic reports follow an impressive end to the 2009 trading year that saw the main Toronto index up 31 per cent – its best one-year gain since 1979. The Dow Jones industrials ran ahead 19 per cent, the tech-heavy Nasdaq 44 per cent and the S&P 500 index jumped 23 per cent as investors hope a solid economic recovery is taking place.

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