Equities tail off

Apr. 6, 2009 (Baystreet.ca) --

10:19 am EST A short week on the markets began on the wrong foot, with markets going downward, amid the apparent collapse of IBM Corp.'s acquisition of Sun Microsystems Inc.

Toronto's S&P/TSX composite index tumbled 122.56 points lower in the first half-hour trading to 8,943.20

The rally which started March 10, initially on good news from the American financial sector and bolstered since then by a string of positive economic data, had sent the TSX up 20% while the Dow is up about 22.5% since both hit multi-year lows on March 9.

On the economic front, Statistics Canada reported a sharp drop in the value of building permits issued during February.

The agency reported that the value of permits fell 15.9% to $3.7 billion in February. It said the drop was mainly due to a 30.5% plunge in the value of non-residential building permits, particularly in Ontario.

The TSX energy sector fell as oil prices retreated. Suncor Inc. gave back 60 cents to $29.19 while Canadian Natural Resources moved down 61 cents to $52.90.

The financial sector eased as TD Bank declined 57 cents to $45.61.

The gold sector declined, as Goldcorp Inc. faded $1.70 to $36.40.

The base metals sector dipped, with Sherritt International down 13 cents to $3.34.

Shares in Teck Cominco Ltd. moved up five cents to $8.50 after it announced it has sold an interest in the gold production at its Andacollo mine in Chile to Royal Gold. The Vancouver-based mining giant said the deal is valued at $300 million U.S.

Sources tell the Globe and Mail that the deal is one of several moves the company plans take in order to reduce its huge debt burden. It says the company will sell off more than $2 billion U.S. in asset sales, and mount a debt restructuring and a potential equity issue.

Canada's largest base metals miner is struggling to reduce the enormous debt load it incurred from its top-of-the-market, $14-billion U.S. takeover of Fording Canadian Coal Trust last year.

Canadian investors also took in another deal gone bad. The takeover of Allen-Vanguard Corp. by Tailwind Financial in an all-stock deal worth $41.6 million has fallen through. The Ottawa-based maker of bomb disposal equipment and other military hardware said Monday another deal to take the company private is being considered and its shares gained half a cent to 16 cents.

Shares in Mega Brands Inc. plunged 13.5 cents to 39.5 cents after the toymaker said a tough sales environment coupled with significant impairment charges to its goodwill resulted in deeper fourth-quarter and full-year losses. The Montreal-based company reported a quarterly loss of $323.3 million U.S., compared with a loss of $66.2 million U.S. in the prior-year period.

The TSX announced before the open that shares in hybrid locomotive maker Railpower Technologies Corp. will be delisted from the exchange at the end of trading Monday. Trading was suspended immediately. Last week, the Quebec company said it was considering liquidation as an option under creditor protection, after receiving no better offers from prospective buyers or partners.

Its shares last traded Thursday at six cents.

The Canadian dollar was down 0.54 cents to 80.74 cents U.S.

ON BAYSTREET

Of the 13 TSX subgroups, nine were in negative country. Gold tailed off 3.8%, followed by materials, down 3.3%, metals and mining 2.3%.

Of the four groups that gained, utilities gained the most, 0.3%, followed by health-care stocks, up 0.2%, information technology eked out a 0.1% improvement.

The TSX Venture Exchange slid a further 7.86 points to 967.73 while the Nasdaq Canada Index stumbled 1.16 points to begin the day's trading at 572.95

ON WALLSTREET

The Dow Jones Industrials average fell 91.68 points to begin the day at 7,925.91

The S&P 500 index retreated 12.10 points to 830.40, while the Nasdaq gave back 32.35 points to 1,589.52.

IBM and Sun Microsystems were going over final details of a deal that would have seen IBM pay about $7 billion U.S. to acquire Sun, but IBM pulled the offer this weekend and Sun ended IBM's status as its exclusive negotiating partner.

It was unclear whether talks were continuing, or if Sun was trying to find an alternative suitor to IBM.

General Motors chief Fritz Henderson said Sunday on NBC's "Meet the Press" that the beleaguered automaker was working to avoid bankruptcy, but warned that bankruptcy did remain a possibility.

MGM Mirage is reportedly considering the sale of two of its most reliable casino operations in an effort to raise cash, according to the Wall Street Journal.

Financial shares declined following a downgrade of 11 major U.S. banks by veteran banking analyst Mike Mayo of CLSA. Bank of America, Citigroup and JPMorgan Chase were among the companies mentioned.

Aluminum giant Alcoa kicks off the U.S. first-quarter earnings season Tuesday. Expectations for corporate earnings are low and investors will focus on their forecasts for the remainder of the year.

The May crude contract on the New York Mercantile Exchange moved down $2.01 to $50.50 U.S. a barrel.

The May bullion contract in New York declined $18.10 to $878.20 U.S. an ounce,