The Canadian dollar closed Friday at a more than three-year high and the Toronto Stock Exchange made triple-digit gains as oil prices stabilized, with investors reassured any shortfall in Libyan oil production would be recouped.

The loonie's official close was 102.19 cents US, a gain of 0.47 of a cent, and its highest level since November 2007.

The S&P/TSX composite index moved 184.82 points, or 1.3 per cent higher, to 14,052.13.

The market had closed lower all week as violence in Libya persuaded investors to take some profits from a market surge that has gone on pretty much without a break since last summer.

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S&P/TSX composite index 3-month chart

The energy sector moved 1.6 per cent higher as the April crude contract on the New York Mercantile Exchange rose 60 cents to $97.88 US a barrel.

Oil prices continued to back away from a spike to $103 on Thursday amid signs the crisis in Libya may have cut crude supplies less than previously estimated.

Also, Saudi Arabia, the biggest crude producer within the Organization of Petroleum Exporting Countries, said it would increase production to make up for any shortfalls due to unrest in Libya, if necessary.

In Halifax, Finance Minister Jim Flaherty said he's not overly worried about the risks of a spike in oil prices. 

Rising oil prices have both positive and negative impacts in Canada, he said. 

"We export a lot of oil out of Canada, we consume a lot of oil in Canada as well. The oilsands, the oil industry in Canada is good  for the entire country," he said after an address to the Halifax Chamber of Commerce. 

Flaherty said he's watching the situation closely in case it creates inflation but for the time being he isn't alarmed.

"We're watching what's going on in the oil markets. I don't think there's reason to have any strong concern about any long-term effects," he said. "We'll have to watch and see whether there's any interruption, any significant interruption, in supply and if there is whether that interruption of supply is made up by others." 

Some economists have said they're worried by a sharp rise in food prices linked to higher fuel costs.

Oil has jumped from $84 US last week amid investor concern the recent wave of unrest in the Middle East and North Africa could affect other oil-rich countries in the region.

With files from The Canadian Press