Freefall continues

Feb. 10, 2009 (Baystreet.ca) --

12:19 pm EST The pronounced descent by markets throughout North America continued by noon Friday, with no sign of a cushion to break that fall.

The S&P TSX Composite Index experienced an even bigger drop than in the morning, 211.87 to 7,973.48, largely on the weakness of base metals and financials.

Meanwhile, data showed falling prices in Canada and the U.S.

Statistics Canada reported the country's annual inflation rate edged lower to 1.1% in January from 1.2% the previous month, driven lower by falling gasoline prices.

The financial sector in both countries bore the brunt of early losses as investors worry that a string of programs announced by the Obama administration in the past two weeks won't be enough to pull the U.S. out of a deep recession.

In particular, investors have been disappointed over a lack of details contained in U.S. Treasury Secretary Timothy Geithner's bank bailout announcement last week.

The TSX financial sector fell, with Royal Bank down $1.30 to $26.63 and Manulife Financial lost $1.11 to $13.39.

Kingsway Financial Services Inc. said Friday its loss for the fiscal fourth quarter exceeded gloomy estimates released earlier this month, citing underwriting charges at one of its troubled U.S. subsidiaries and impairments to goodwill.

Kingsway, which focuses primarily on auto insurance, reported a loss of $360.4 million U.S., which widened year-earlier losses of $103.5 million. Its shares fell 14 cents to $3.01.

Shares in Fairfax Financial Holdings Ltd. were down $9.05 to $362.46 even as the international insurance and investment company reported the biggest annual profit in its 23-year history thanks to "the best returns ever in a brutal investment environment."

The company, which keeps its accounts in U.S. dollars, earned $1.47 billion on revenue of $7.98 billion for the year.

The energy sector suffered as oil prices fell back from Thursday's 14% surge. Suncor Inc. declined $1.14 to $22.81 in Toronto and Canadian Natural Resources stepped back 68 cents to $39.68.

The gold sector was ahead, as nervous investors sent the price of gold close to the $1,000 U.S. level. Goldcorp Inc. advanced 49 cents to $39.63.

Barrick Gold Corp. shares were down 55 cents to $45.35 after the company took a $773-million U.S. goodwill writedown while posting a fourth-quarter loss of $468 million. Full-year profit dropped to $790 million from $1.12 billion in 2007. Gold production in 2009 is projected between 7.2 million and 7.6 million ounces, lower than 2008 production of 7.66 million ounces.

Teck Cominco Ltd. shares were down 29 cents to $3.76 after the miner agreed to sell its 50% interest in the Williams and David Bell mines in northern Ontario for $65 million U.S. to an affiliate of Barrick. The sale is part of Teck's plan to sell non-core assets to pay down debt.

Shares in Tim Hortons Inc. ran ahead $2.63 to $31.08 even as the coffee shop chain said quarterly profit dropped to $69.1 million from $75.7 million a year earlier. Earnings were reduced by asset impairment charges related to store closures

Shares in Canwest Global Communications plunged 5.5 cents or 13% to 37 cents as the Globe and Mail reported that Leonard Asper is scrambling to secure a financial lifeline for the company before the end of the month to prevent his family-run media empire from sliding into bankruptcy protection.

Investors will be awaiting word from the Canadian divisions of General Motors and Chrysler as they submit their restructuring plans to government officials.

Overseas, General Motors Corp.'s Swedish-based subsidiary Saab went into bankruptcy protection Friday so the unit can be spun off or sold by its struggling U.S. parent, officials said.

The move comes after Sweden turned down GM's request for government help for Saab.

The Canadian dollar had regained .05 cents by lunchtime to 79.48 cents U.S.

BAYSTREET Of the 13 TSX sub-groups, all but two were downward by midday, metals and mining losing 5.4%, financials off 5% and energy stocks down 3.6%.

Positive stocks were gold, ahead 2.3%, and consumer discretionaries, up 0.02%.

The TSX Venture Exchange dropped 6.81 points to 895.29 while the NASDAQ Canada index shed 22 points, to 413.30

ON WALLSTREET

The Dow Jones industrials index lost 131.10 points to 7,334.58, after yesterday's close plumbed six-year-plus lows. The Standard & Poor's 500 surrendered 14.80 points to 764.14, while the NASDAQ composite index faded 10.25 points to 1,432.57.

In New York, fears of bank nationalization sent Bank of America plunging 56 cents to $3.37 U.S. while Citigroup dropped 48 cents to $2.03 U.S.

Economically speaking, U.S. consumer prices rose by 0.3% last month, the biggest monthly increase since a 0.7% rise in July. But inflation for the 12 months ending in January was zero.

U.S. home improvement retailer Lowe's says its fourth-quarter profit dropped 60% to $162 million U.S. as consumers spent less on items for their houses amid a deepening recession. The company also expects lower earnings this year.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.75% from 2.81% Thursday.

The March crude contract in New York was down 71 cents to $38.77 U.S. a barrel.

The April bullion contract on the New York Mercantile Exchange rocketed up $17 to $993.50 U.S. an ounce.