TSX dips on day

Real-estate's lead offset by metals' drop

May 3, 2010 (Baystreet.ca) --

The Toronto stock market lost its grip on positive territory by the end of the session Monday, as weak mining shares were offset by signs of an improving economy south of the border.

The S&P/TSX composite index ended the day behind 14.19 points to 12,196.51

Investors are afraid the move will slow down China's red-hot economy and imperil the global economic recovery by cutting demand for resources such as those produced by Canada's mining companies.

The Toronto base metals sector plunged, while the May copper contract on the New York Mercantile Exchange fell 5.9 cents to $3.28 U.S. a pound.

The gold sector also lost significant ground. Weighing on the sector was news that the Australian government has proposed a new tax on the profits of resource companies.

The 40% tax proposed by Prime Minister Kevin Rudd targets mining companies that have made bumper profits as burgeoning demand from manufacturers in China and India pushed up the price of iron ore and other commodities. Shares in Barrick Gold Corp., which owns several mines in Australia, lost 96 cents to $43.34.

The financial sector added strength after the German cabinet agreed to provide Greece with billions in aid as part of a bailout plan. Shares in Scotiabank added 91 cents to $52.69 after the bank announced Friday that it has agreed to buy all the assets and deposits of R-G Premier Bank, which was shut down by U.S. regulators.

In Canadian corporate news, Shaw Communications announced it will become one of Canada's pre-eminent entertainment companies by buying a restructured Canwest Global Communications through a series of transactions totaling $2 billion.

Shaw will pay $700 million to buy a piece of Canwest that's currently owned by Goldman Sachs. The rest of the price tag is designed to satisfy Canwest's creditors. Shaw's stock fell 37 cents to $18.72 while Canwest's shares lost six cents to 10 cents.

Canwest's newspapers are being sold under a separate process. Torstar Corp. said it has submitted a bid but the Toronto-based media company, which owns the Toronto Star, is expected to have competition. Torstar shares edged up 12 cents to $11.29.

Iamgold Corp. said its Essakane mine in West Africa will begin processing ore in June, ahead of schedule and within its $443-million budget. The Toronto-based company owns 90% of Essakane. Shares of Iamgold sank 11 cents to $18.07.

And Shares of Angiotech Pharmaceuticals, Inc. jumped 10 cents or more than 8.9% to $1.23 after the Vancouver-based company said its Quill knotless suture system will be distributed in the United Kingdom, Ireland and France by B. Braun.

The Canadian dollar trekked upward 0.46 cents to 98.91 cents U.S.

ON BAYSTREET

The 14 TSX subgroups were evenly split between gainers and losers. The former group was led by a 1% jump by real-estate issues, while telecoms added 0.7% and financials prospered 0.5%.

The seven sagging groups were weighed mostly by metals and mining, off 3.6%, global base metals, sliding 2.5% and materials, dropping 2%.

The TSX Venture Exchange sidled back 8.26 points to 1665.54, while the Nasdaq Canada index improved 4.47 points to 789.56.

ON WALLSTREET

In New York, stocks rallied Monday, bouncing back after a big selloff last week as investors welcomed news that European leaders agreed to provide Greece with $146-billion U.S. in aid over the next three years.

The Dow Jones industrial average soared 143.22 points, or 1.3%, to 11,151.83

The S&P 500 index picked up 15.57 points to 1,202.26. The Nasdaq composite index leaped 37.55 points to 2,498.74

A number of better-than-expected economic reports and some positive monthly sales numbers from the nation's automakers added to the gains.

Investors welcomed reports that Greece will receive a substantial bailout from the European Union (E.U.) and the International Monetary Fund (IMF), as it set to rest worries that the country's ballooning deficit would drag on the euro and exacerbate problems for other debt-plagued nations. Portugal, Italy, Ireland, Greece and Spain -- the so-called PIIGS, have all struggled to pay back debt.

The Greek bailout, along with better-than-expected reports on manufacturing and construction spending in the U.S., overshadowed reports that China is boosting its bank reserves to counteract inflationary pressure. Concerns about China limiting its lending dragged on markets earlier this year.

Investors may have also taken some comfort from comments from influential investor Warren Buffett over the weekend. Buffett said he doesn't think Goldman Sachs did anything wrong in the sale of subprime-related securities at the center of an SEC fraud charge and potential criminal probe from the Justice Department. Buffett's Berkshire Hathaway has a big investment in Goldman Sachs' preferred stock.

Stocks tumbled Friday, posting a weekly decline for the first time in nine weeks, after reports that Goldman Sachs is facing a criminal probe sparked analyst downgrades and a selloff in the financial sector.

Monday, Goldman Shares gained 5%, gaining along with a variety of financial shares. The KBW Bank sector index added 1.5%.

However, gains were broad-based, with 29 of 30 Dow stocks advancing, led by Boeing, United Technologies, Chevron, Hewlett-Packard, IBM, 3M and Caterpillar.

Auto and truck sales were being released throughout the session. Ford Motor posted a 25% year-over-year sales gain in April, the fifth straight month of 20% or more improvement. General Motors said sales rose 6% from a year ago and fell 2% from last month.

Toyota Motor said sales for April rose 24% versus a year ago, while Honda Motor said sales rose 13% versus the previous year.

Worries that Greece would default on its debt have dragged on the stock market for weeks, particularly with a May 19 deadline looming for the country to pay back over $11 billion.

But over the weekend, the E.U. and the IMF agreed to provide $146-billion U.S. in aid over three years, with up to $40 billion U.S. available in the first year. The loans were granted after Greece announced it was taking on new "austerity" measures to cut expenses and bring down its budget.

On Monday, influential Germany voted to provide $40 billion U.S. over three years, saying that letting the country go bankrupt would destabilize the euro.

UAL's United Airlines said it will buy Continental in a $3.2-billion U.S. stock deal that will create the world's largest airline, overtaking current leader Delta Air Lines.

The combined company will use United's name and Continental's logo and is expected to have annual revenues of $29 billion U.S.

Apple said it sold one million iPads in one month, with sales outpacing the first month for the iPhone by roughly two to one.

Economically speaking, the Institute for Supply Management's April manufacturing index rose to 60.4 from 59.6 in March versus forecasts for a rise to 60.0, according to a consensus of economists surveyed by Briefing.com.

March construction spending rose 0.2%, the government reported. Spending fell 2.1% in April and was expected to fall 0.3%.

Personal income for March rose 0.3% after rising 0.1% in February, according to a Commerce Department report released before the start of trading. Economists thought income would rise 0.3%.

Personal spending rose 0.6% in March, in line with forecasts, after rising 0.5% in the previous month.

Treasury prices fell, raising the yield on the 10-year note to 3.70% from Friday's 3.66%. Treasury prices and yields move in opposite directions.

The price of a barrel of oil tailed off 10 cents to $86.05 U.S.

Gold prices tacked on a dollar to $1,182 U.S. an ounce.