Canada's main stock index advanced to a record high on Friday, as markets threw off worries caused by the downing of Malaysia Airlines flight MH17 over eastern Ukraine and Israel’s decision to send ground troops into Gaza.

New York's Dow index also powered ahead, up 123 points to 17,100, just off its record of 17,138 set Wednesday as sentiments were buoyed by strong earnings.

Toronto's TSX/S&P index was up 62 points to 15,266, a new high, and has advanced 12 per cent since the beginning of the year.

Stock markets had dipped yesterday because of worry over geopolitical tensions, but today investors seemed to have forgotten the crisis.

Gold remains a significant mover in the Toronto market and prices had run up $17 an ounce to $1,308 US on Thursday because of political risk, opening opportunities on gold stock.

Traders were also buoyed by CP Rail’s strong earnings report, pushing that stock up another two per cent on top of a three per cent rise on Thursday.

In the U.S., traders also shrugged off the potential impact of new sanctions imposed on Russia, concentrating on stronger earnings from Google, Honeywell, GE and other big companies,

Market has lost touch with reality: analyst

Several airline stocks rebounded after tumbling a day earlier following the news of the downed Malaysian Airlines airliner. American Airlines Group rose $1.23, or 2.9 percent, to $42.90, while Delta Air Lines added 61 cents, or 1.7 percent, to $37.18. 

David Weidner, an analyst with MarketWatch, said investors’ ebullience was a sign that “the market has lost touch with reality.”

He called the downing of MH17 “a new eruption of global terrorism” and the “most dangerous geopolitical moment since the financial crisis and market crash of 2008-09,” in a note to investors. He said U.S. stock markets were overheated and reacting to earnings and the Fed’s indication that rates will remain low for some time, while discounting the larger crisis overhanging the world.

“But  a war, even without U.S. involvement, can change things quickly. Oil and commodity prices can rise sharply. Trade routes can be disrupted. Sanctions can get truly serious,” he wrote.

Oil prices spike, then dip again

On the New York Mercantile Exchange on Thursday, crude oil futures spiked as high as $103.94 US and Brent crude for September delivery was trading at $108.03 in London. They had been rising for two days after a U.S. report showed tighter crude supply.

On Friday, prices slipped with West Texas Intermediate futures down 16 cents to $103.13 and Brent, an international benchmark for oil, trading at $107.76 a barrel.

Fallout from sanctions against Russia and fresh fighting in Syria threaten to play further havoc with oil prices in the week ahead.

Russia is a large oil and gas supplier to the EU and any Russian counter-measures after harsher sanctions imposed this week could affect supplies to Europe. The loss of MH17, with the loss of 298 lives, possibly at the hands of pro-Russian separatists, could ratchet up that tension.

"Crude oil prices are expected to continue their recent uptrend due to increasing volatility in the oil market following the uncertainty in Middle East and highly tentative conditions between Ukraine, Russia and the West," said analyst Myrto Sokou from Sucden Financial Research in London.

ISIS militants captured a gas field in central Syria on Friday, killing about 100 Syrian troops loyal to President Bashar Assad in the deadlest fighting so far in the conflict. It also captured about 200 workers as it moved deeper into Syrian oil production territory.

With files from Canadian Press