TSX comes off lows

Metals leads path to green

May 5, 2010 (Baystreet.ca) --

Canadian investors continued to dump stocks for a third session in mid-morning deals Wednesday.

The S&P/TSX composite index was off its lows of the morning, but still behind 40.61 points by noon to 11,990.25. The index was off nearly 240 points in the early going.

Falling commodities prices and lingering worries over the euro zone debt issues aggravated selling, with stocks across a variety of sectors dipping to levels not seen in the past several weeks.

Speculation over the contagion of Greece debt issues created nervousness among investors after euro-zone policymakers warned that a "bush fire" in Greece might turn into a "forest fire" in the E.U. Meanwhile, Greek's private and public sector workers demonstrated against the stricter austerity measures proposed by the government as part of the $146-billion U.S. bailout package.

Adding fuel to the fire, rating agency Moody's Investor Service said it might downgrade its ratings on Portugal's debt in next three months.

Among base metals stocks, FNX Mining and Quadra Mining lost around 3% each.

The price of crude oil was lingering around $80 U.S. a barrel, losing nearly 7% in the past two sessions. Recent reports from the U.S. revealed crude inventories pile up in the world's largest consuming nation. Today's EIA report showed that crude oil inventories increased by 2.8 million barrels from the previous week.

In the energy space, Suncor Energy lost nearly 4%. Yesterday, the company said it swung to profit in the first quarter, reporting net earnings of $0.46 per share compared with a net loss of $0.20 per share in the prior-year period.

Petroleum and natural gas focused trust Penn West Energy Trust surrendered over 4% despite swinging to profit in first-quarter, reporting net income of $0.18 per unit compared with a net loss of $0.25 per unit in the prior-year period.

Among gold stocks, Kinross Gold lost 5.72%. The company reported improved first-quarter net income of $0.16 per share, compared to net income of $0.11 per share in the same quarter last year. Analysts were expecting the company to post net income of $0.16 per share for the quarter.

Gold producer Yamana Gold gave in nearly 1%. The company increased its dividend to an annualized $0.06 per share, or $0.015 per share per quarter, representing a 50% increase over the prior annualized dividend of $0.04 per share.

Yesterday, the company reported lower net income of $0.11 per share compared to $0.12 per share last year, despite 62% growth in revenues. The company attributed this to lower foreign exchange gains as well as unrealized losses on derivatives. Analysts expected the company to earn $0.11 per share for the quarter.

Meanwhile, Red Back Mining edged up 0.16% after it said it will sell 24 million shares to Kinross for $25 each in a private placement.

Among financial plays, Bank of Montreal gave in 2.23% and RBC slipped 1.36%.

Meanwhile, insurance services provider Intact Financial gathered 3.30% after it turned to profit in first-quarter, recording net income of $1.01 per share compared with a loss of $0.30 per share in the prior year period. The company declared a quarterly dividend of $0.34 per share.

Telecommunications company TELUS Corp. reported lower first quarter net income of $0.84 per basic share, compared to $1.01 per basic share last year.

However excluding income-tax related adjustments, net earnings were $0.83 per share, up from $0.81 per share in the same quarter a year earlier. The company declared a quarterly dividend of $0.50 per share. The stock gained 3.65%.

The Canadian dollar stumbled 0.03 cents to 97.47 cents U.S.

ON BAYSTREET

The 14 TSX subgroups were evenly split between gainers and losers. The seven winning groups were led by metals and mining, up 2%, global base metals, advancing 1.9% and materials, ahead 0.9%.

The seven groups still trailing Tuesday's close included utilities and energy stocks, down 1.2% each, and industrials, off 0.9%.

The TSX Venture Exchange dropped 20.85 points to 1,601.56, while the Nasdaq Canada index actually picked up 1.11 points to 764.55.

ON WALLSTREET

In New York, stocks turned mixed Wednesday afternoon as the Dow recovered from deep morning losses.

The Dow Jones industrial average actually recovered 1.20 points by midday to 10,927.97

The S&P 500 index regained 0.20 points to 1,173.80. The Nasdaq composite index stumbled 7.12 points to 2,417.13

Earlier losses were attributed to signs of a deepening crisis in Europe. Moody's said it was considering a downgrade of Portugal's debt, while three were reported dead amid riots in Greece.

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 on Wednesday morning, Greek authorities said three people 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 rumors that Spain was negotiating a bailout from the International Monetary Fund. Although both Spanish officials and the IMF denied the rumors, 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. Early Wednesday, the VIX was up 4% to 24.81.

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

The New York-based company 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 U.S. 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 3.56% from Tuesday's 3.61%. Treasury prices and yields move in opposite directions.

The price of a barrel of oil fell $1.40 to $81.37 U.S.

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