TSX rides energy, banks upwards

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

10:18 am EST Traders in Toronto returned to the market in a buying mood Thursday, after two punishing days, and loaded up on energy, base metals and financial stocks to the turn the market around, however slightly.

A conference later today between Prime Minister Stephen Harper and U.S. President Barack Obama may also have helped improve the mood.

New York markets also rose as investors looked past a weak earnings report from computer/printer company Hewlett-Packard Co.

The S&P TSX Composite Index climbed out of its gully, picking up 70.47 points in the first half-hour of trading to 8,246.42

Among energy stocks, Petro-Canada rose 97 cents to $27.08 and EnCana Corp. gained 58 cents to $49.98.

The financial sector was ahead as European banks said Thursday that they were finally ready to clear credit default swaps in Europe, in an effort to avoid extra European Union legislation over the derivatives that were partly blamed for the financial crisis.

Swaps offer insurance against securities for lenders worried about a borrower's ability to pay them back. The unregulated $60-trillion U.S. market has been operating without a central clearing house to handle the deals since the September collapse of U.S. investment bank Lehman Bros.

Royal Bank gained 86 cents to $27.84 while Bank of Montreal climbed 98 cents to $27.58.

The base metals sector ran up as Teck Cominco Ltd. improved 13 cents to $4.28.

Cameco Corp. shares were down 90 cents to $18.22 after the uranium miner said it is raising between $400 million and $460 million in an issue of new common stock "to strengthen its capital position and enhance its financial flexibility to allow it to take advantage of opportunities that may emerge from the current industry environment."

The gold sector pulled back as Goldcorp Inc. lost 65 cents to $40.20.

In other earnings news, Silver Wheaton Corp. said Thursday that writedowns on long-term investments led the company to a fourth-quarter loss of $54.2 million U.S., reversing year-earlier profits of $24.9 million. Its shares lost 17 cents to $9.13.

The company, which describes itself as the largest publicly traded pure-play silver producer, reported quarterly sales of 2.7 million ounces of silver, down from 3.5 million ounces sold a year earlier.

In economic news, Canada Mortgage and Housing Corp. says housing starts fell 7.5% to about 211,056 units in 2008 from 2007.

But the agency forecast sharply lower levels of starts for the next two years and sliding home sales as the recession further discourages consumer confidence, with starts expected to be about 160,250 for 2009 and about 163,350 for 2010 followed by some improvement.

CMHC also said that existing home sales, as measured by the Multiple Listing Service, are expected to decline 14.6% during 2009 while the average price will slide 5.2%.

Statistics Canada's leading indicator composite index accelerated to 0.8% in January from 0.5% in December - the largest and most widespread decrease since the index began its decline in September.

The housing index contracted by 7% in January, its largest monthly decline since June 1990.

Still, consumer spending expanded, while furniture and appliance purchases rose, despite the slump in housing demand.

The Canadian dollar gained 0.6 cents to 80.00 cents U.S.

BAYSTREET Of the 13 TSX sub-groups, 11 were in positive country, energy stocks leading the way, up 3%, metals and mining up 2.6%, financials ahead 2.5%.

The two laggards were gold, off 2.3% and materials, down 0.3%.

The TSX Venture Exchange recovered 4.35 points to 920.17 while the NASDAQ Canada index improved 1.46 points, to 440.86

ON WALLSTREET

The Dow Jones industrials index was up 38.55 points, to begin Thursday's trading at 7,594.15.

The Standard & Poor's 500 index was 6.14 up to 794.56, while the NASDAQ composite index tacked on 9.30 points to 1,477.27.

Stateside, Hewlett-Packard shares fell $2.14 to $31.94 U.S. after it said Wednesday that its profit dropped 13% to $1.85 billion U.S. in the latest quarter, dragged down by weakness in all major business lines except services, a division HP bulked up with its $13.9 billion U.S. acquisition of Electronic Data Systems last year.

Sales ticked up just 1% to $28.8 billion U.S., more than $3 billion short of analyst estimates. Things aren't expected to improve soon.

HP, the world's top seller of personal computers, also cut its 2009 guidance, but it was still in line with Wall Street's expectations.

Investors also took in data showing jobless insurance claims for last week coming in around expectations and unchanged from the previous week at 627,000.

The March crude contract on the New York Mercantile Exchange rose $1.10 to $35.72 U.S. a barrel.

The April bullion contract on the Nymex was off $1.30 to $976.90 U.S. an ounce