Big boards ease off

Mar. 13, 2009 (Baystreet.ca) --

12:20 pm EST North American markets gave back some of their strength by midday Friday, thus diminishing the possibility that indexes in Toronto and New York will enjoy four straight days of gains.

Canadian investors got some more negative economic news with the release of Statistics Canada's February job figures.

After initial gains Friday, Toronto's S&P/TSX composite index was 83.41 points in the red at noon to 8,198.86

The TSX financial sector was off after rising almost 20% over the past three sessions.

TD Bank slipped 46 cents to $40.64 and Bank of Montreal declined 65 cents to $31.28.

The energy sector declined ahead of a meeting of OPEC Sunday and investors are wondering if the cartel will cut production to support prices.

Meanwhile, the International Energy Agency has lowered its estimate for global oil demand in 2009. Petro-Canada slipped 67 cents to $29.26 and Canadian Natural Resources was down $1.03 to $46.98.

The base metals sector moved down with Ivanhoe Mines down 70 cents to $5.49 and Sherritt International declined 15 cents to $2.02.

The gold sector was off slightly, as Goldcorp Inc. rose 77 cents to $37.25.

The jobless numbers show the unemployment rate jumped to 7.7% last month from 7.2% in January as the economy shed 82,600 jobs.

This was the second outsized job contraction in a row following January's massive 129,000 labour market retreat.

Also on the economic front, Canada posted a record trade deficit in January on vanishing trade in automobiles with the U.S., signaling a deepening recession.

The merchandise trade deficit was $993 million in January, Statistics Canada said today.

Economists surveyed by Bloomberg forecast a January deficit of $1 billion. The Ottawa-based agency also increased its estimate for the December deficit, which was the first since 1976, to $652 million from an initially reported $458 million.

Canada's trade balance has swung from a surplus of more than $5 billion in August as commodity prices dropped and U.S. consumers slowed purchases of cars and homes.

The mood was more optimistic overseas as investors in Japan and China took heart from renewed hopes of economic stimulus efforts.

Chinese Premier Wen Jiabao said the government is ready to roll out even more measures, while Japan's prime minister is calling for a new stimulus package.

The Canadian dollar gained 0.2 cents early on Friday at 78.45 cents U.S.

BAYSTREET Of the 13 TSX sub-groups, 10 were in negative territory as the luncheon bell rang. Metals and mining was down the chute 2.6%, information technology was down 1.5%, energy off 1.3%.

The three winning groups were led by telecoms, up 0.9%, health-care and utilities up less than 0.1%. The TSX Venture Exchange picked up 1.1 points to 844.54, while the Nasdaq Canada index tailed off 16.79 points to 399.85

ON WALLSTREET New York's Dow Jones industrial average had slid 32.98 points by noon to 7,137.08, after three consecutive sessions in which the big board took on 9% more strength.

The S&P 500 index surrendered 5.57 points to 745.17, while the Nasdaq composite index lost 14.99 to 1,411.11

Reports that Citi chairman Richard Parsons said his bank doesn't need additional government support after receiving three bailouts had earlier helped lift financial stocks.

Encouraging comments from Bank of America Corp.'s chief executive Ken Lewis added to the optimistic tone. Lewis said his bank was profitable in January and February. On Tuesday, news that Citigroup was having its best quarter since 2007 started the rally.

Uncertainty about the financial system's future has been the driving force behind the unrelenting selling that has plagued investors for weeks. Investors were also encouraged by signs that China may be ready to add to already announced stimulus efforts.

Analysts caution that this week's rally has also been fed by short covering, which occurs when investors are forced to buy stock to replace shares they borrowed and then sold on expectations of a decline.

AOL, a unit of media conglomerate Time Warner, named Google executive Tim Armstrong as its new president. The move was seen by analysts as an indication that Time Warner - the parent of CNNMoney.com - is eager to prepare the ailing AOL for a spinoff or sale.

Economically speaking, before the start of trading, the Commerce Department reported that the January trade deficit was $36 billion U.S. in January. That's the lowest figure since October 2002, when the trade deficit was $35.2 billion U.S.

A deficit of $38 billion was expected, according to a consensus of economists surveyed by Briefing.com. In December, the deficit was $39.9 billion U.S.

Also, the government reported that import prices were down 0.2%.

Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.95% from 2.84% Thursday. Treasury prices and yields move in opposite directions.

The April crude contract on the New York Mercantile Exchange was up 39 cents to $47.42 U.S. after surging almost $5 U.S. a barrel on Thursday.

The April bullion contract in New York rose $3.30 to $927.30 U.S. an ounce