Big boards backtrack

Mar. 18, 2009 (Baystreet.ca) --

12:31 pm EST The Toronto stock market was in retreat Wednesday morning as investors took some profits following six straight sessions of big gains.

New York markets also stepped back after rising sharply for five of the past six days as investors look to the conclusion of the Federal Reserve's interest rate meeting at midafternoon and deal-making in the tech sector.

Toronto's S&P/TSX composite index was still behind 194.42 points in by noon time to 8,365.18, after Tuesday's 173-point jump pushed the main index to a 13% surge over the six days.

The rally has been especially beneficial for the financial sector, which has soared 28% over the six days, sparked by news that American banks Citigroup and Bank of America were profitable in the first two months of this year.

In Canadian economic news, wholesale sales declined 4.2% to $41.1 billion in January. Statistics Canada said the drop was due largely to lower activity in the automotive products sector.

The TSX financial sector declined with TD Bank down $1.09 to $42.44 and Manulife Financial fell 17 cents to $13.63.

The energy sector was lower as EnCana Corp. stepped back $1.52 to $49.98 while Suncor Inc. moved down $1.82 to $31.43.

Libya's National Oil Company says it will buy Canada's Verenex Energy Inc., matching a $394-million U.S. bid by a subsidiary of the China National Petroleum Corp.

Verenex has operations in Libya's Area-47, a region estimated to hold roughly 2.15 billion barrels in crude oil reserves. Its shares dipped 39 cents to $8.93 Canadian.

The gold sector was down as Barrick Gold Corp. faded 51 cents to $36.10.

Allied Nevada Gold Corp. which is working to get the Hycroft project into commercial production, says its annual net loss increased last year to $79.6 million U.S., up from $11.3 million in 2007. The company reported no revenues for last year or the prior year and its shares were unchanged at $5.25.

The base metals sector stepped back, as Teck Cominco Ltd. lost 29 cents to $4.96.

Shares in Timminco Ltd. plunged 58 cents or 24.6% to $1.77 after it said Tuesday it will temporarily cut jobs and curtail productions of silicon due to difficult market conditions and reduced demand.

Union workers at a Syracuse-area auto parts plant owned by Magna International have again rejected a contract proposal aimed at keeping the money-losing factory open. Magna has said it would accelerate the shutdown of New Process Gear if the offer was rejected.

It had briefly halted its "wind-down process" while the union voted on the new offer. Magna shares moved 24 cents higher to $29.72.

The Canadian dollar backslid 0.32 cents at 78.42 cents U.S.

BAYSTREET

Of the 13 TSX subgroups, 10 were off by lunchtime. Materials weighed things down, declining 4.4%, energy was lower by 3.9%, materials were off 3.7%.

Of the three subgroups gaining ground, information technology gained the most, 1.3%, followed by consumer discretionaries, up 0.5% and consumer staples, ahead 0.3%.

The TSX Venture Exchange was down 5.83 points at 847.29, while the Nasdaq Canada index was 11.56 points in the red at 409.91.

ON WALLSTREET

The Dow Jones Industrials average stumbled 98.13 points to 7,297.57. The much-broader S&P 500 lost 7.63 points to 770.49, while the tech-laden Nasdaq gave back 5.47 to 1,456.64

The Wall Street Journal reported that International Business Machines Corp. is in preliminary talks to buy Sun Microsystems Inc. for at least $6.5 billion U.S. in cash.

IBM and Sun both make computer systems for corporate customers, and the newspaper said a purchase of Sun would help IBM in the finance and telecommunications markets. Sun stock soared $3.25 or 65.5% to $8.22 U.S. while IBM slipped $2.28 to $90.63 U.S.

On the economic front, after watching rates slashed to zero, investors will focus on how the Fed intends to spend funds to get credit flowing to the economy once again. It could do so by buying assets from banks to help them recapitalize. Another possibility is buying long-term Treasury bonds.

Investors also took in news that U.S. consumer prices rose in February by 0.4%, the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades.

Core inflation, which excludes food and energy, rose 0.2% in February, slightly higher than the 0.1% rise economists expected.

China has rejected Coca-Cola Co.'s $2.5-billion U.S. bid to buy major China's Huiyuan Juice Group Ltd. in a closely watched case that stirred nationalist opposition to the sale of a successful homegrown brand to foreigners. The Commerce Ministry rejected the purchase on anti-monopoly grounds.

Treasurys rose, lowering the yield on the benchmark 10-year note to 2.95% from 3.01% Monday. Treasury prices and yields move in opposite directions.

The April crude contract on the New York Mercantile Exchange backed off 95 cents to $48.21 U.S. a barrel.

The April bullion contract on the New York Mercantile Exchange moved down $13.80 to $903 U.S. an ounce.