AM: TSX higher as surging gold lifts bullion stocks; N.Y. little changed
TORONTO - The Toronto stock market was positive in early trading as a surge in gold prices lifted bullion stocks while mining and energy stocks were weak as prices for oil and copper backed away following a string of strong gains.
The S&P/TSX composite index moved 28 points higher to 11,949 while the TSX Venture Exchange was ahead 9.36 points to 1,471.35.
The Canadian dollar rose a 0.09 of a cent to 97.61 cents US.
The TSX global gold sector was the biggest percentage advancer, up two per cent as the August bullion contract on the New York Mercantile Exchange rose $16.20 to US$1,246.70 an ounce. Barrick Gold Corp. (TSX:ABX) gained $1.15 to C$45.48.
Gammon Gold Inc. (TSX:GAM) said it has suspended operations and fired 397 workers at its El Cubo mine in Mexico. The Halifax-based company will also file criminal charges against seven union executives. The company said it experienced continued illegal labour disruptions at the mine and financial demands from the union that Gammon describes as “untenable." Its shares slipped two cents to $7.74.
The energy sector was ahead 0.17 per cent as the July crude contract on the Nymex lost 45 cents to US$77.22 a barrel as confidence slips that a three-week rally will continue amid signs of weak U.S. crude demand.
Oil has recovered from $64 on May 25 _ after dropping from $87 earlier last month _ as fears eased that Europe’s debt crisis will stall global economic growth. Investors are eyeing clues about U.S. oil demand in crude inventory data, which had shown signs of improving recently but unexpectedly rose last week, the Energy Department’s Energy Information Administration said Wednesday.
Some analysts don’t expect the massive BP oil spill in the Gulf of Mexico to squeeze supplies anytime soon.
The base metals sector was slightly lower while the July copper contract in New York fell five cents to US$2.95 a pound. Quadra FNX Mining, which announced Wednesday that a Chinese company has pulled out of a joint venture, dipped 16 cents to C$12.32.
Copper had also enjoyed a series of advances from last week when data showed a stronger than expected rise in Chinese exports, which in turn raised hopes for demand for the metal.
New York markets were slightly higher after weekly jobless insurance claims rose unexpectedly last week after falling three straight weeks.
Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000. That’s the highest level in a month. Economists had forecast that claims would fall.
The government also reports that consumer prices dropped for a second straight month following a decrease in energy costs.
The Dow Jones industrial average was down 5.1 points to 10,404.3.
The Nasdaq composite index moved ahead 6.52 points to 2,312.45 while the S&P 500 climbed 0.7 of a point to 1,115.3.
Traders will also take in the U.S. Conference Board’s index of leading economic indicators. Economists expect the measure, which is designed to forecast economic activity in the next three to six months, will increase 0.5 per cent in May after a surprise slide in April.
Another midmorning report is expected to signal that consumer prices dropped for a second month in May.
North American stock markets cruised to a slightly higher close on Wednesday following sharp gains on Tuesday, held back by news that U.S. home construction and applications for building permits slumped in May.
In other corporate news, Canadian Energy Services & Technology Corp. (TSX:CEU) is increasing its dividend to common shareholders. The company, which designs and implements drilling fluid systems for the oil and natural gas industry, says its cash dividend will be increased by 33 per cent to eight cents per common share. CESTC also said it has formed a new division to manufacture and sell both drilling fluid products and production chemicals and its shares gained 20 cents to $15.16.
Magna International Inc. (TSX:MG.A) has released a CIBC World Markets report on its controversial share conversion plan, which says the autoparts giant’s disclosure is “entirely appropriate” and minority shareholders have all information needed to evaluate the plan. Magna has offered to buy out founder Frank Stronach’s controlling stake for US$863 million but the Ontario Securities Commission and some shareholders don’t like the offer. Magna shares rose $1.03 to $70.33.
Shares in BP were unchanged at US$31.85 in New York as the company’s agreement to set up a US$20 billion fund and cancel dividend payments to cover damage from the Gulf of Mexico oil spill was seen as reducing uncertainty over its liabilities.
Some analysts had a “buy” rating on the stock despite the risks to the company from the spill.
BP PLC’s shares have lost nearly half of their value since the April 20 explosion on the Deepwater Horizon rig which killed 11 workers and sent oil gushing from a broken pipe.
In Asia, Japan’s Nikkei 225 stock average dropped 0.7 per cent while Australia’s S&P/ASX 200 lost 0.7 per cent.
The Shanghai Composite index fell 0.4 per cent with investors holding back ahead of the launch of Agricultural Bank of China’s mammoth share listing, after a five-day closure for public holidays.
Hong Kong’s Hang Seng rose 0.4 per cent.
London’s FTSE 100 index gained 0.72 per cent, Frankfurt’s DAX was up 0.36 per cent and the Paris CAC 40 moved up 0.84 per cent.
Spain, which is fighting speculation it will need a bailout, has raised nearly euro3.5 billion or US$4.3 billion as investors snapped up a bond offering. However, the bonds were sold at sharply higher interest rates that indicate they still view government finances with skepticism.
Spain strongly denies reports that its troubled public finances and banks’ credit problems are pushing it toward some sort of rescue similar to the one given to Greece by the European Union and the International Monetary fund.
