The Toronto stock market moved higher Tuesday on rising commodity prices and in New York, the Dow Jones industrial average crossed 13,000 for the first time since May 2008 before retreating.

The S&P/TSX composite index ended trading higher by 165.06 points, or 1.2 per cent, at 12,623.26.

The Canadian dollar closed down 0.43 of a cent to 100.34 cents US after Greece on Monday finally secured its second massive bailout in less than two years.

Traders bought the greenback as they moved into U.S. Treasuries on the realization that the European debt crisis still has a few more chapters to run.

"If you look broadly at what the deal does, it's more of a can-kicking exercise than actual resolution but we didn't expect anything different," said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

"It's not going to solve the long-term issues. The long term issues are really about reducing structural government debt levels to sustainable positions. What this does is it buys time."

Commodity prices advanced after China's central bank moved over the weekend to cut banks' reserve ratios to encourage lending. The People's Bank of China said that it will reduce the proportion of cash that banks must set aside by half a percentage point to 20.5 per cent from Feb. 24.

Dow's ascent over 13,000 short-lived

The bank had moved repeatedly over the last couple of years to tighten lending requirements in order to slow the economy to get a grip on high inflation.

"When we get a data point or any reports that show that growth out of China and thus the demand for commodities and raw materials is going to get increased, that is going to have a proportional benefit to the TSX relative to some of those other markets," added Fehr.

The April crude contract on the New York Mercantile Exchange gained $2.65 to $106.25 US a barrel, in part on Iran’s threats to embargo shipments to Europe. That was its highest level since last May.

Copper for March delivery was up 12 cents to $3.83 US a pound. China is the world's biggest consumer of the metal. April gold was ahead $32.60 to $1,758.50 US an ounce.

The Dow’s ascent above 13,000 didn’t hold.

The average was above 13,000 for about 30 seconds before dropping back. It reclaimed the mark just after noon and again just after 1:30.

It closed up 15.82 points at 12.965.69.

The last time the Dow traded above 13,000, the Lehman Brothers investment bank was still solvent and the worst phase of the financial crisis was still ahead for the markets.

Just last summer, the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the United States credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

The S&P 500 was up 0.98 at 1,362.21 and the Nasdaq was lower by 3.21 at 2,948.57.

With files from The Canadian Press and The Associated Press