TSX slides again

Energy stocks topple

May 5, 2010 (Baystreet.ca) --

The Toronto stock market was off its worst levels of the session but still deep in the red Wednesday afternoon as worries about a spreading European debt crisis darkened investor sentiment.

The S&P/TSX composite index capsized 155.73, or 1.3%, to 11,875.13, after being off more than 200 points in the early going.

On the TSX, Suncor Energy fell $1.87 to $32.51 while Canadian Natural Resources lost $3.12 to $73.83.

Investor nervousness was heightened Wednesday after Moody's Investor Services warned it may downgrade its view on Portugal's debt in the next three months. The ratings agency said Wednesday that it has put Portugal's Aa2 bond rating on review for possible downgrade as a result of the recent deterioration in the country's public finances as well as its long-term growth prospects.

Standard & Poor's last week downgraded Portugal's credit rating by two notches.

There are also concerns about the Greek government's ability to push through massive austerity measures in return for the cash. Wednesday's general strike in Greece -- which left three dead -- is unlikely to assuage concerns that the government will get the popular backing it needs.

Fears of the consequences of a sovereign debt default pushed the financial sector down with Bank of Montreal giving back $1.36 to $60.93.

Worries about softening demand for commodities pushed rail stocks down with Canadian National Railways down $1.06 to $59.07.

In the gold sector, Eldorado Gold advanced 17 cents to $16.07 while Kinross Gold Corp. lost 84 cents to $18.21.

The base metals sector moved into positive territory as copper also recovered from early sharp declines. The July contract eased three cents to $3.15 U.S. a pound. Teck Resources gained 19 cents to $37.44 but HudBay Minerals lost 58 cents to $11.45.

The telecom sector was ahead, with Telus Corp. shares up $1.08 to $38.61 after the company announced it was hiking its dividend by 5%.

Talisman Energy Inc. shares slid seven cents to $16.85 after the Calgary based global energy company saw its first quarter earnings drop by about half, to $228 million, mainly because of big one-time gains last year. But Talisman said it is continuing its transition into a major shale gas producer.

Oil and pipeline distributor Enbridge Inc. reported its net earnings in the first quarter fell 39% to $342 million or 93 cents a share. That compares with net profits of $558 million or $1.54 a share last year, when the company booked gains from an asset disposal. Its shares declined 53 cents to $48.29.

Excluding one-time gains and losses, adjusted earnings rose to $318 million from $268 million.

Agricultural products giant Agrium Inc. posted Wednesday a first-quarter net loss of $7 million U.S., dragged down by $68 million in hedging losses, but improved from a year-ago loss of $60 million. Agrium shares lost 44 cents to $61.36.

Penn West Energy Trust units backed off 76 cents to $19.06 even as it reported a first-quarter profit of $77 million, reversing a year-earlier loss of $98 million on a big improvement in the price of oil.

And paper producer Domtar Corp. said Wednesday that it will restore a quarterly dividend in July for the first time in nearly five years with a 25-cent payment. Its shares fell $1.14 to $71.30.

The Canadian dollar stumbled 0.47 cents to 97.03 cents U.S.

ON BAYSTREET

All but four of the 14 TSX subgroups were lower Wednesday. Energy stocks weighed most heavily, at 3.1%, followed by health-care, down 1.6% and industrials, giving back 1.5%.

The four gainers were led by information technology and global base metals, advancing 0.5% each, and telecoms, up 0.3%.

The TSX Venture Exchange dropped 25.33 points to 1,597.08, while the Nasdaq Canada index settled back 8.51 points to 754.93.

ON WALLSTREET

In New York, stocks extended losses to end sharply lower Wednesday, amid more signs of a deepening crisis in Europe. Moody's said it was considering a downgrade of Portugal's debt, while three people were reported dead due to riots in Greece.

The Dow Jones industrial average eased 59.94 to 10,866.83

The S&P 500 index was off 7.73 points to 1,165.87. The Nasdaq composite index stumbled 21.96 points to 2,402.29

Moody's rating agency released a statement early Wednesday that it had placed Portugal's investment-grade bonds "on review for possible downgrade ... by one, or at most two, notches."

Also Wednesday morning, Greek authorities said three people had died in central Athens in a fire during street riots protesting severe new government austerity measures that are attached to its $146-billion U.S. bailout.

These and other overseas worries have slammed U.S. stocks this week. Global markets also felt the blow Tuesday, amid rumours that Spain was negotiating a bailout from the International Monetary Fund. Although both Spanish officials and the IMF denied the rumours, the S&P fell 2.4% and the blue-chip Dow tumbled 2% Tuesday.

On Tuesday, Wall Street's key index of volatility hit its highest level in more than two months. The VIX, which gauges fear in the market, surged more than 18% to close at 23.84 Tuesday. By midday Wednesday, the VIX was up 9.6% to 26.11.

Time Warner reported its highest quarterly profit in company history, easily beating Wall Street's forecasts.

The New York-based parent company of CNNMoney.com said its net income rose to $725 million U.S., or 62 cents U.S. per share, up 10% from a year earlier. Analysts expected earnings of 48 cents per share.

Shares of biotech firm InterMune plunged 75% Wednesday after the Food and Drug Administration rejected the firm's application for a lung drug.

The latest readings on jobs, though not enough to distract investors from the debt woes in Europe, showed some turnaround in the domestic job market.

Outplacement firm Challenger said planned job cuts in April dropped to the lowest level in nearly four years. A separate report showed private-sector employers added jobs for the third consecutive month.

Treasury prices shot up sharply, lowering the yield on the 10-year note to 3.55% from Tuesday's 3.61%. Treasury prices and yields move in opposite directions.

The price of a barrel of oil fell $3.15 to $79.59 U.S.

Gold prices gained six dollars to $1,175 U.S. an ounce.