A weakening Canadian dollar against European currencies, coupled witha surge of acquisitions of Canadian firms, helped push Canadian direct investment abroad and foreign direct investment here in 2006 to their biggest gains in six years.

Statistics Canada said direct Canadian investment abroad hit $523.3 billion, a gain of $63.7 billion last year, or 13.8 per cent higher than the end of 2005. That was the fastest percentage increase since the technology boom of 2000, the federal agency said.

Meanwhile, foreign direct investment in Canada hit $448.9 billion at the end of 2006, up $41.3 billion, or 10.1 per cent, from the end of 2005. This was also the fastest percentage gain since 2000.

The increase was mostly the result of acquisitions of major Canadian firms by foreign investors —the same situation as in 2000.

As a result, Statistics Canada said the net direct investment position— the difference between Canadian direct investment abroad and foreign direct investment in Canada— increased to $74.4 billion at the end of 2006, up from $52 billion a year earlier.

While the United States remained the top place for Canadian capital, mainly going to fund operations of U.S. divisions of Canadian firms, the destination of money going outside Canada is becoming more diversified.

The share of direct investment in the United States was just 43 per cent of the total last year, down from 52 per cent 10 years ago and 69 per cent 20 years ago, Statistics Canada said.

Direct Canadian investments in the United States last year rose by $19 billion to $223.6 billion, while investment in the United Kingdom rose by $10.1 billion to $59 billion.

Statistics Canada said the fall of the Canadian dollar against the euro and the pound sterling had a positive impact on direct investment assets in European countries. About 29 per cent of investment was in European countries at the end of 2006, up from 28 per cent in 2005.

Foreign direct investment in Canada was still led by American investors at the end of 2006. They held $273.7 billion in the form of direct investment, up $14.7 billion from 2005.

They were still by far the most important direct investor in Canada, holding 61 per cent of the total, but down from 64 per cent in 2005.