| Commodity stocks lift TSX; N.Y. weak amid European debt concerns |
| Monday, 08 February 2010 09:56 |
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TORONTO - Energy and mining stocks lifted the Toronto stock market Monday despite mounting debt concerns in Europe and worries about the strength of a global economic recovery. The S&P/TSX composite index advanced 39.3 points to 11,262.5. Markets have been pressured by fears about unsustainable government debt in several European countries, particularly Portugal and Greece. Those concerns intensified last week, undermining the euro, after Portugal's lawmakers defeated the government over its deficit reduction plan. Stock markets have been heading lower since mid-January in the wake of China's plans to limit economic growth. There was also growing uncertainty around the U.S. government's proposed rules to restrict trading by large financial institutions. Sovereign debt worries have been brewing since late November when Dubai announced it that the government's flagship investment company was in financial trouble and announced a request for a six-month standstill on repayments of its massive debt. "I was sort of surprised at that juncture that the market didn't react more negatively than it did," said Steve Uzielli of ScotiaMcLeod. "But what we didn't know is, are there other Dubais out there? And then lo and behold, you have Greece and Spain and Portugal. It has put pressure on the euro - it's not going to bring down the whole complex but it is a cause for concern." Hopes for a strong rebound have helped drive stock markets higher with hardly a break beginning in early March of 2009. But the recent troubles demonstrate a recovery might not be happening as fast as some had anticipated. "We never expected the recovery to be moving up in a straight line - the so-called V-shaped recovery - we've been anticipating more of a choppy year in 2010," added Uzielli. "It's become cliched now with a strong first half economically and a weak second half. But even in that first half, you're going to get stops and starts." The Canadian dollar moved up 0.03 cent to 93.48 cents US. On the TSX, the base metals sector led gainers, up 2.71 per cent as March copper added five cents to US$2.91 a pound. Commodity prices were depressed last week as sovereign debt concerns pushed the U.S. dollar higher. Equinox Minerals (TSX:EQN) gained 19 cents to C$3.58 and Teck Resources (TSX:TCK.B) gained $2 to $36.20 ahead of earnings coming out after the market close. Oil prices headed higher after three days of declines with the March crude contract on the New York Mercantile Exchange ahead 92 cents to US$72.11. The energy sector moved ahead 0.32 per cent with Canadian Natural Resources (TSX:CNQ) ahead 93 cents to C$70.22. The financial sector turned positive, up 0.54 per cent, as Royal Bank (TSX:RY) rose 46 cents to $53.244. The gold sector was off 0.44 per cent even as the April gold contract on the Nymex gained $20.50 to US$1,073.30 an ounce. Barrick Gold Corp. (TSX:ABX) faded 32 cents to C$38.13. The TSX Venture Exchange moved up 10.49 points to 1,465.9. New York markets were mixed as the Dow Jones industrials backed away 2.6 points to 10,009.6. The Nasdaq composite index was up 5.65 points to 2,146.77 while the S&P 500 index moved ahead three points to 1,069.2. In economic news, Canada Mortgage and Housing Corp. reported that the annual rate of housing starts reached 186,300 in January, up from 176,100 in December. The agency added that actual housing starts for 2009 totalled 149,081 units, with activity improving as the year progressed. Investors also pored over the latest earnings reports. Mining company Xstrata PLC on Monday reported a 41 per cent drop in full-year net profit as last year's economic downturn and the weakness of the dollar affected global commodity sales. Profit fell to US$2.77 billion. Xstrata became a major player in Canada's mining industry after it acquired the former Falconbridge nickel miner a few years ago. Elsewhere, the Canpotex marketing partnership has agreed to sell 350,000 tonnes of Canadian potash to China's Sinofert. The fertilizer ingredient was sold at "competitive prices" on the spot market and is to be shipped before the end of March. Canpotex is owned by three companies: PotashCorp. (TSX:POT), Agrium Inc. (TSX:AGU) and Mosaic Corp. (NYSE:MOS). Potash shares gained 78 cents to C$111.83 while Agrium climbed 57 cents to $63.67. Bombardier Inc. (TSX:BBD.B) climbed two cents to $5.47 after a German customer ordered 48 additional Talent 2 trains from the transportation giant for euro200 million or about US$272 million. And the company also says it is offering to buy back up to US$550 million of its outstanding debt securities for cash, in order to take advantage of current favourable conditions on capital markets. In Asia, Japan's Nikkei 225 closed at a nearly two-month low, falling 1.1 per cent . Chinese shares also dropped, but trading was listless, with investors keeping to the sidelines ahead of a week-long Lunar New Year holiday, which begins Saturday. The Shanghai Composite Index lost 0.3 per cent while Hong Kong's Hang Seng index fell 0.6 per cent. London's FTSE 100 index added 0.66 per cent, Frankfurt's DAX gained 1.11 per cent while the Paris CAC 40 index was up 1.26 per cent. |
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