Rally takes break

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

04:42 pm EST Fresh worries about the financial sector and some nervousness ahead of the start of the first-quarter earnings season persuaded investors to push the "pause button Monday on a four-week old rally North American stock markets had enjoyed.

Toronto's S&P/TSX composite index climbed off its lows for the day, but still finished off by 49.59 points to 9.016.17

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.

The TSX was off early lows in large part because of Research In Motion Ltd. Its shares jumped $5.88 or 8% to $78.68 after soaring 19% on Friday on a well-received earnings report and outlook.

The financial sector eased after an analyst at Calyon Securities gave an underweight rating to U.S. banks. Mike Mayo cited "the ongoing consequences of increased risk taking by banks" and added that loan losses to total loans should increase to levels that top the Great Depression.

TD Bank dropped 77 cents to $45.81 and CIBC was down cents 57 cents to $48.30.

The TSX energy sector fell as oil prices retreated. EnCana Corp. lost 85 cents to $54.17 and Suncor Inc. gave back 32 cents to $29.47.

The gold sector was down as Barrick Gold Corp. faded $1.45 to $35.86.

The base metals sector dipped, with Sherritt International down 18 cents to $3.29.

Shares in Teck Cominco Ltd. moved up one cent to $8.46 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 told the Globe and Mail that the deal is one of several moves the company plans take in order to reduce its huge debt burden arising from its $14-billion acquisition 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.

WestJet Airlines Ltd. shares were off 41 cents to $11.84 after the carrier said it filled 81.9% of its seats last month, down from a load factor of 86.6% in March 2008 which included Easter holiday travel.

Shares in Potash Corp. moved down $2.24 to $102.85 after unionized workers at its Lanigan mine ratified a new contract. Their union says wages will rise 18% over three years, generally, and certain jobs will have an even bigger increase.

Mega Brands Inc. shares plunged 9.5 cents or 18% to 43.5 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 in the prior-year period.

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 Canadian dollar was down 0.55 cents to 80.73 cents U.S.

ON BAYSTREET

Of the 13 TSX subgroups, nine finished the day in the red, gold losing 3.1% of its lustre, followed by materials, 2.7% off Friday's pace, and metals and mining stocks, down 2.2%.

The four gainers were led by information technology, up 3.2%, telecoms, up 1.2% and consumer staples, ahead 0.7%.

The TSX Venture Exchange slid a further 12.42 points to finish at 963.17 while the Nasdaq Canada Index advanced 32.68 points to 606.79

ON WALLSTREET

The Dow Jones Industrials average fell 41.74 points to 7,975.85

The S&P 500 index retreated seven points to 835.48, while the Nasdaq gave back 15.16 points to 1,606.71

IBM and Sun 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 "Big Blue"'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. Sun shares tumbled $1.85 or almost 22% to $6.64 U.S. while IBM pulled back $1.53 to $100.69 U.S.

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.

Ford Motor Co. shares ran up 63 cents or 19% to $3.88 U.S.in New York after it said it completed a tender offer announced last month, reducing its debt by $9.9 billion U.S.

MGM Mirage rallied 36% on reports that it's looking to sell two of its non-Las Vegas properties to raise cash. The casino company is looking to sell its MGM Grand Detroit and Beau Rivage in Mississippi in a deal that could be worth about $2 billion U.S.

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.

Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.90% from 2.89% Friday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for May delivery fell $1.46 to settle at $51.05 U.S. a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $24.50 to settle at $872.80 U.S. an ounce