TSX lurches lower

Health-care weighs on markets

May 7, 2010 (Baystreet.ca) --

Bay Street stocks opened lower Friday, despite a recovery in energy prices and after recent selloffs that trimmed over 3% from the main index.

The S&P/TSX composite index sank 64.92 points to begin Friday at 11,777.51

Encouraging jobs data from both sides of the border may help lift sentiment, however. While Canada surprised markets by reporting jobs growth of over five times consensus estimates, job creation in the U.S. came in much higher than economists' expectations.

However, lingering worries over the euro-zone fiscal situation may weigh on sentiment, capping big gains.

International gold company Eldorado Gold reported that its first-quarter net income was $0.10 per share, up from $0.04 per share in the first quarter of 2009. Analysts were expecting the company to report earnings of $0.07 per share this quarter. The company also announced an annual dividend of $0.05 per common share.

Gold producer Iamgold Corp. reported first-quarter net earnings of $0.16 per share, compared to $0.17 per share in the year ago quarter.

Precious and base metal explorer New Gold reported first-quarter net income of $17.5 million, compared to net income of $12.1 million in the prior-year quarter. On a per-share basis, net income was $0.04, down from $0.06 in the same quarter last year. Analysts were expecting the company to post income of $0.04 per share this quarter.

Gold mining company Richmont Mines said its first-quarter net earnings grew to $0.07 per share from $0.05 per share in the prior year period. The company said it will acquire an additional 30% of the issued and outstanding shares of Louvem Mines Inc.

Energy company Canadian Natural Resources reported improved first-quarter net earnings of $1.60 per share, compared to $0.56 per share in the same quarter last year. The company said it would subdivide its common shares on a two-for-one basis.

Food products company Premium Brands Holdings reported first-quarter earnings of $0.10 per share, compared to $0.12 per share last year.

Information technology and business processing services provider CGI Group said it will acquire Stanley Inc. through a cash tender offer at $37.50 per share, representing an enterprise value of around $1.07 billion.

Real estate company MI Developments reported lower first-quarter funds from operations of $0.55 per share, compared to $0.75 per share last year. The company declared a dividend of $0.15 per share.

Gaming software solutions provider CryptoLogic reported wider first-quarter loss of $0.25 per share, compared to $0.10 per share in the same quarter a year earlier.

LNG Energy said it acquired Kunagu Real Estate S.A., which helped it to increase its ownership from a 12% to 20% net interest in a shale gas exploration project in Poland.

In economic news, Statistics Canada said employment increased by 109,000 in April, recording the largest monthly gain in percentage terms since August 2002.

The unemployment rate edged down one-10th of a percentage point in April to 8.1%. Economists were expecting the economy would add about 20,000 jobs and the unemployment rate would remain unchanged at 8.2%.

The Canadian dollar regained a cent to 96.02 cents U.S.

ON BAYSTREET

All but two of the 14 TSX subgroups were lower in the first half-hour of trading. Health-care stocks weighed most heavily, losing 1%, followed by energy and industrial stocks, off 0.9% each.

The two gainers were global base metals, picking up 2.2% and metals and mining stocks, progressing 0.5%.

The TSX Venture Exchange dipped 2.19 points to 1,560.49, while the Nasdaq Canada index slid 0.75 points to 734.93.

ON WALLSTREET

In New York, stocks edged higher Friday, in a choppy first few minutes of trading, as investors took tentative steps a day after one of the most gut-churning days in Wall Street history.

The Dow Jones industrial average raised itself 28.42 points at the outset to 10,548.74

The S&P 500 index regained 3.27 points to 1,131.42. The Nasdaq composite index added 2.27 points to 2,321.91.

Investors eyed a surprisingly strong rise in April payrolls that showed employers added 290,000 jobs in the month. The figure topped estimates and was the biggest one-month gain since March 2006.

But investors were more focused on finding their footing after Thursday's wild swings. The Dow Jones industrial average experienced its largest-ever point decline in intraday trading Thursday, plummeting almost 1,000 points before recovering to close down 348. Erroneous trading in Procter & Gamble and several other stocks sparked the massive selloff.

Fears about the spread of the European debt crisis dragged on stocks through the early afternoon. But the selling picked up in intensity and the Dow reached its bottom at around 2:40 p.m. ET.

The selling was a result of trading glitches that caused some stocks, including Dow component Procter & Gamble, to plunge 37% to $39.37 U.S. per share from the close of $62.12 U.S. Wednesday. The consumer products maker recovered most of that loss by the close, ending just 2% lower.

At the closing bell, the Dow was down 348 points, or 3.2%, to end at 10,520. The Dow's biggest one-day point decline on a closing basis was Sept. 29, 2008, when it fell 777.68, which had also been the previous intraday mark. The S&P 500 index slipped 38 points, or 3.2%. The Nasdaq composite dropped 83 points, or 3.4%.

Despite the recovery on Thursday, stock strategists were still cautious. The possibility of Greek chaos spreading across the continent "is still a big cloud hanging over Europe," said David Jones, chief market strategist at IG Markets in London.

"I think the problem with the Athens situation is that it's incredibly fluid and it seems to change day by day," he said.

Also, Britain's elections have ended in a hung Parliament, with none of the ruling parties possessing enough seats for majority rule. However, the elections aren't having much of an impact on markets outside of Britain.

In company news, AIG reported net income attributable to the company of $1.5 billion U.S., or $2.16 U.S. per share, during the three-month period ended March 31. A year earlier, AIG lost $4.4 billion U.S., or $39.67 U.S. per share.

AIG's shares are up 23% this year on renewed hopes that it can pay back the billions it owes to taxpayers. The stock was up about 1% in premarket trading.

The U.S. Bureau of Labor Statistics said 290,000 jobs were added in April, though the unemployment rate rose to 9.9%, from 9.7%. Economists surveyed by Briefing.com had expected an increase of 187,000 jobs.

Treasury prices dipped a bit, raising the yield on the 10-year note to 3.42% from Thursday's 3.40%. Treasury prices and yields move in opposite directions.

The price of a barrel of oil fell 84 cents to $76.27 U.S.

Gold prices gained another five dollars to $1,202 U.S. an ounce.