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Feb. 25, 2010 (Baystreet.ca) --
A rally in gold stocks, with firm support from financials, helped the Canadian market turn into the green in Thursday's afternoon session.
The S&P/TSX composite index leaped 109.61 points, or 1%, after spending much of the day in the red, closing at 11,631.44.
The price of gold rose amid speculation that China may buy the 191.3 tons of gold, which had been announced for sale by the International Monetary Fund.
However, heavy selling in the U.S. markets on account of renewed economic health concerns as well as a fall in oil prices retained caution in Bay Street, putting a lid on gains.
The Gold Index rose in strength, as Barrick Gold Corp. gained 2.5% at $39.69, Yamana Gold Inc. added 4.4% to $11.11 and Kinross Gold Corp. was up 3.6% to $19.18.
The Financials Index went upward, with Royal Bank of Canada rising 2% to $57.20, Toronto-Dominion Bank up 0.9% at $66.84 and Canadian Imperial Bank of Commerce up 3.1% to $69.95, while Laurentian Bank of Canada gave in 0.8% to $39.87.
The Energy Index slumped, as Imperial Oil Ltd. shed 0.6% to $39.05 and Nexen Inc. lost 0.4% to $23.22.
CIC Energy Corp. rose 2.1% to $1.46 after reporting its full-year loss narrowed to $5.66 million in 2009 from $8.30 million in the prior year.
Among IT stocks, MacDonald, Dettwiler and Associates Ltd. added 1.8% to $39.79 and Open Text Corp. gained 0.4% to $50.80, while Research In Motion was fairly flat at $74.
The Consumer Staples Index was down, with George Weston Ltd. losing 2.1% to $69.02 and Loblaw Cos. Ltd. easing 0.2% to $37.22.
Home channel retailer RONA Inc., which reported a marginal increase in its fourth-quarter net earnings to $30.83 million from last year's $29.75 million, eased 0.4% to $15.72.
Gerdau Ameristeel Corp., which reported a fourth-quarter net loss attributable to Gerdau Ameristeel & Subsidiaries of $46.1 million, gave in 2.4% at $7.70.
Consulting firm Stantec Inc. was down 1.5% to $26.27, even after reporting a rise in fourth-quarter net income to $22.9 million from last year's $20.0 million.
The Canadian dollar subsided 0.52 cents to 94.32 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups were higher to end the day. Gold led the parade, up 3.2%, materials were 2.5% better, and real-estate prospered 1.3%.
The three laggards were utilities, off 1.6%, consumer staples, down 0.8%, and energy, slipping 0.1%.
The TSX Venture Exchange was still down 1.47 points to 1,517.94, while the Nasdaq Canada index slipped 0.79 points to 745.15.
ON WALLSTREET
In New York, stocks cut losses, but remained in the red Thursday afternoon as the latest worries about Greece's debt crisis and weaker-than-expected reports on the economy raised fears about a global recovery.
The Dow Jones industrial average was off its lows of the day, but still down 53.13 points to close at 10,321.03. The S&P 500 index stumbled 2.30 points to 1,102.94, and the Nasdaq composite subtracted 1.68 points to 2,234.22.
Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 740 million shares. On the Nasdaq, decliners topped advancers two to one on volume of 1.67 billion shares.
Stocks tumbled out of the gate after both Standard & Poor's and Moody's said they may have to cut Greece's debt rating if the country doesn't implement its so-called austerity measures, meant to rein in its deficit.
Greece has said it will raise the retirement age and have civil servants take bonus cuts, among other measures. But a workers' strike Wednesday added to questions about the nation's ability to cut its debt. Investors are concerned about the broader implications for other euro zone countries, and the euro, should Greece default.
But after a bigger selloff through the early afternoon, stocks trimmed some losses heading into the final hour of the session.
One expert said that while the Greek debt situation is a serious one for the market, it's probably going to come in waves over the next six to nine months. "Maybe they'll cut a deal initially (with regulators), but longer-term, there are going to be more issues."
He added that investors were likely just as concerned about the day's economic news, including worse-than-expected reports on jobless claims and factory orders.
The threat of a Greek default rattled global markets earlier in the month, pushing U.S. stocks to three-month lows and causing the S&P 500 to lose over 9%, just shy of the technical definition of a correction. Investors worried that Greece's problems could reflect a broader euro zone debt crisis that could impact Portugal, Spain, Ireland, Italy and other debt-challenged European nations.
But European officials said earlier this month that they were ready to step in and help Greece if need be, and that seemed to calm investors for a few weeks. S&P and Moody's downgrade talk revived the worries.
In addition, stocks have been rising for the last two weeks, setting the market up for a little pullback, particularly in the aftermath of last year's big rally.
Federal Reserve Chairman Ben Bernanke told Senators Thursday that the central bank is looking into whether Goldman Sachs and other big banks worsened Greece's debt crisis.
News reports have said that Goldman and other banks helped arrange deals that may have disguised the extent of Greece's debt problems. In addition, the banks have made bets that Greece will default on loans it took from U.S. financial institutions, according to a New York Times article.
Bernanke was speaking before the Senate Banking Committee Thursday in his second day of Congressional testimony on the economy.
On Wednesday he told a House committee that while the economic recovery is chugging along, the job market remains weak. Against that backdrop, interest rates will stay low for the foreseeable future. That seemed to reassure investors worried about the outlook for the economy and stocks rallied Wednesday.
Coca-Cola said it will buy the North American operations of its biggest bottler, Coca-Cola Enterprises (CCE) in a deal that would cut costs and give it more control of its distribution.
The multi-layered deal has Coca-Cola giving up its 34% stake in CCE, worth about $3.4 billion U.S., and taking on $8.88 billion U.S. in debt.
Additionally, the companies agreed that CCE will buy Coke's bottling operations in Norway and Sweden for $822 million U.S. and that it has the right to buy Coke's 83% stake in its German bottling operations.
The deal comes as rival PepsiCo is about to close a $7.8-billion U.S. deal to buy Pepsi Bottling Group and PepsiAmericas, its largest bottlers.
Coke shares plunged 4% and CCE shares rallied 32%.
Palm said it expects revenue to fall far below current forecasts due to worse-than-expected sales of its new smartphones. Shares plunged 16% on the forecast.
The Obama administration's health care summit was underway Thursday, with Republican and Democratic leaders from both houses of Congress debating ways to reform the system.
The president said that both sides agree that costs need to be contained, but they remain bitterly divided over whether to press through with the current bill or start over.
On the economic front, the Labor Department released its weekly jobless claims report before the opening bell on Thursday.
Initial jobless claims surged to 496,000 in the week ended Feb. 20. That's much more than the 460,000 claims projected by a consensus of economist opinion from Briefing.com. It's also much larger than the revised tally of 474,000 claims reported for the prior week.
Also, the Census Bureau released its monthly report on orders for durable goods, a barometer for manufacturing that rose much more than expected.
Orders for durable goods rose 3% in January, the government reported. The orders were expected to have risen 1.5%, according to Briefing.com consensus.
Treasury prices moved up, lowering the yield on the 10-year note to 3.63% from 3.69% late Wednesday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil backpedaled $1.74 to $78.26 U.S.
Gold prices jumped $11 to $1,106 U.S.